A quick check seems to suggest Paypal's bid-ask spread, i.e. what you will lose if you exchange to another currency and back is about 4%. I think you just need to accept it as part of the risk of international transactions, TBH. Try using a credit card next time, though.
I feared that might be the case - whilst there could be risk of abuse/fraud, in this circumstance it's absolutely shit/unfair. I pay someone x amount in good faith; they decide they won't honour it and refund less than I paid! very shit!
A quick check seems to suggest Paypal's bid-ask spread, i.e. what you will lose if you exchange to another currency and back is about 4%. I think you just need to accept it as part of the risk of international transactions, TBH. Try using a credit card next time, though.