A foreign exchange markup is the extra margin a bank or payment provider adds on top of the underlying market exchange rate when converting one currency into another, so the customer receives a slightly worse rate than the true mid market rate.
General information, not financial, legal, or tax advice. Verify current terms and eligibility with the provider before applying.
How a foreign exchange markup works
When a bank or payment provider converts money from one currency to another, it usually does not give the customer the exact mid market rate, the midpoint between the buy and sell prices in the wider market. Instead it applies a slightly less favourable rate, and the gap between that rate and the mid market rate is the markup. It is often expressed as a percentage, for example a margin of one or two percent above the mid market rate. The markup can be charged on its own or alongside a separate transfer or transaction fee, and the size of the margin varies widely by provider, currency pair, and amount, current as of 31 March 2026.
Markup, fees, and the mid market rate
The total cost of converting currency usually has two parts: any explicit fee, which is a stated charge, and the foreign exchange markup, which is built into the exchange rate itself. A service that advertises no fees can still apply a markup, so the headline can understate the real cost. Comparing the rate offered against the mid market rate at the same moment shows the markup, and adding any explicit fee gives the full cost. This matters because two providers with similar stated fees can differ significantly once the markup is included.
Why it matters to a business
Businesses that pay overseas suppliers, receive payments in other currencies, or hold multi currency balances can convert large sums, so even a small markup percentage can add up to a meaningful amount. Understanding the markup helps a business compare providers on the full cost rather than the advertised fee alone, and can inform whether to use a bank, a specialist money transfer service, or a multi currency account. Markups, fees, and rates change constantly and vary by provider and amount, so confirm the rate and any charges at the time of the transaction.
Frequently asked questions
What is a foreign exchange markup?
How is a foreign exchange markup different from a fee?
How can you tell how big a markup is?
Why does a foreign exchange markup matter for a business?
Definitions, fees, features, and eligibility change and vary by region. This page was last reviewed on 31 March 2026. Confirm current terms with the provider before applying.