A €1,000 example
Say the mid-market EUR→USD rate is 1.0850. Your bank offers 1.0525:
- 📊 At mid-market, €1,000 would buy $1,085
- 🏦 At the bank's rate, you get $1,052.50
- 🕳️ The $32.50 difference (≈3%) is the markup — profit for the bank, invisible on your statement
Add a €5 "flat fee" on top and the true cost is €37.50. This is why comparing total received amount beats comparing fee lines every time.
How providers profit from the spread
Currency providers earn two ways: the flat fee (visible) and the markup (hidden in the rate). Traditional banks and airport kiosks lean hardest on markups — 3–5% is common. Specialist transfer services typically charge 0.4–1.5%. The honest ones show you the markup explicitly next to the mid-market rate.
How to dodge the markup
- 🔍 Always compare against the mid-market rate (Google it) before sending
- 🧮 Calculate total cost: (mid-market − offered rate) × amount + flat fee
- ⚠️ Treat "0% fee" claims as a red flag — the profit is usually in the rate
- 💳 For card spending abroad, choose to pay in the local currency, not your home currency (avoids dynamic currency conversion markups)
❓ Markup FAQs
What is an exchange rate markup?
The gap between the mid-market rate and the rate you're offered — a hidden fee. A 3% markup on €1,000 costs you about €30.
What is the mid-market rate?
The midpoint between global buy and sell prices — the "real" rate on Google. Consumers never get it directly; it's the benchmark for measuring markups.
How do I avoid markups?
Compare the offered rate to mid-market, add flat fees, and judge by total cost. "Zero fee" offers often hide the biggest markups in the rate.
Is a 0% fee transfer really free?
Rarely — the profit is usually baked into a worse exchange rate. Always check the rate, not just the fee.
Related: What Is SEPA? · What Is an IBAN? · Free Currency Converter