~1% is just the extra fee, they also pad the rate.
For a $5 wordpress upgrade, collecting from any foreign country, PayPal will take 30 cents plus 3.9% plus their 1% margin on the exchange. so in total, about 11% processing fee.
If those are the types of fees a company has been paying for the last 15 years, they would not bat an eye at our 2.69% all-inclusive fee.