Spread and Markup: The Hidden Cost in Every Exchange
By Today's Currency Rates · Updated June 20, 2026
Almost every currency exchange has two costs, but most people only notice one. The fee is the part you see; the markup — also called the spread — is the part hidden inside the exchange rate itself. Understanding the difference is the single most useful skill for spotting a good deal from a dressed-up bad one.
Fee versus markup
An explicit fee is a charge stated separately: “5 to send” or “1.5% commission.” It’s easy to see and easy to compare.
A markup is the gap between the true mid-market rate — the interbank midpoint, which is the rate we publish on this site — and the slightly worse rate a provider actually quotes you. If the mid-market rate is 1.1000 and you’re offered 1.0750, the provider has built in a markup. You never see a line item for it; it’s simply baked into a less generous rate.
Both are real costs. A transfer can have a tiny fee and a large markup, or no fee at all and a markup so wide it’s expensive. Looking only at the fee tells you almost nothing.
How to calculate the markup
The formula is straightforward:
Markup % = (mid-market rate − quoted rate) ÷ mid-market rate × 100
Worked example. Suppose the mid-market rate is 1.1000 and you’re quoted 1.0700:
- Difference: 1.1000 − 1.0700 = 0.0300
- Divide by the mid: 0.0300 ÷ 1.1000 = 0.0273
- Multiply by 100: about a 2.7% markup
So even with “no fees,” that quote costs you roughly 2.7% of the amount you’re converting. On 5,000 that’s about 135 quietly lost in the rate.
Why “0% commission” can still be expensive
“No fees” and “0% commission” only describe the explicit charge. They say nothing about the markup. A provider can truthfully advertise zero fees while quoting a rate 3% or 4% away from the mid — and earn far more from that hidden spread than a competitor charging a visible 1% fee on a near-mid rate. The marketing isn’t false; it’s just incomplete. Always check the rate, not just the fee.
Typical markups by provider type
These are broad, typical ranges to set expectations, not guarantees — actual markups vary by currency pair, amount, and provider.
| Provider type | Typical markup over mid |
|---|---|
| Airport / hotel exchange desk | 5%–12% |
| High-street bureau de change | 3%–8% |
| Traditional bank transfer | 2%–5% |
| Card foreign-transaction (typical) | 2%–3% |
| Specialist online transfer services | 0.3%–2% |
The pattern is consistent: the more captive the customer and the more physical the convenience, the wider the markup tends to be.
Comparing quotes apples-to-apples
Because every provider packages fees and markup differently, the only reliable way to compare is to reduce each offer to a single number using the mid-market rate as your baseline:
- Look up today’s mid-market rate for your pair — for example USD to EUR.
- Ask each provider exactly how much the recipient will get, after all costs.
- Convert that back into an effective rate (amount received ÷ amount sent).
- Compare each effective rate against the mid to see the true total cost as a percentage.
Whichever option delivers the most money for the same amount sent is the cheapest — regardless of which one advertises the lowest fee. By using the mid as a fixed reference point, you make the hidden cost visible and put every provider on the same footing. For more on cutting these costs, see our currency guides.
Rates on this site are indicative mid-market reference rates (ECB for fiat, CoinGecko for crypto) and are for information only — confirm the exact rate with your provider before you transact.