How can ebay factor in the charges for using Paypal? When you go to pay unless you are paying with existing funds you have the option to let Paypal or your bank do the exchange, how do you think ebay are meant to know which option you will choose or what your bank's rates or charges are?

Ebay clearly say it is an approximation and it is usually pretty near the exe mid rate.

Ebay and Paypal may be owned by the same parent company but they operate totally independently and Paypal run in the same way, with exactly the same fees and exchange rate policies as they did when they were not owned by ebay.