Illustrative currency conversion — swap in a live exchange-rate API before launch.
Converting currency is a single multiplication by an exchange rate, but the rate you get is rarely the rate you see quoted. Published figures are usually the mid-market rate — the midpoint between what buyers and sellers are offering on the interbank market. Nobody at retail actually transacts at that rate. Banks and exchanges apply a spread around it, and that spread is where most of their margin sits, often more than any stated fee.
This matters because a service advertising "zero commission" may still be expensive if its spread is wide, while one charging a visible fee on a near-mid-market rate can work out cheaper. The honest comparison is the total amount that arrives at the other end, not the headline rate or the fee in isolation. Two further costs to watch when travelling: dynamic currency conversion, where a foreign terminal offers to bill you in your home currency at a poor rate — declining and paying in the local currency is almost always better — and card issuers' own foreign transaction fees, which are separate from the exchange rate itself.
Because published rates are usually mid-market, the midpoint of interbank buying and selling. Retail providers apply a spread around it, and that spread is a real cost even where no fee is stated.
When a foreign merchant or ATM offers to charge you in your home currency instead of the local one. The convenience comes at a poor exchange rate, so declining and paying in local currency is almost always cheaper.
Compare the final amount received, not the advertised rate or the fee separately. A zero-commission service with a wide spread often costs more than one charging a visible fee at a better rate.
They respond to interest rate differences, inflation, trade balances, capital flows and market sentiment. Major pairs move continuously through the trading week, so a rate quoted earlier may not be available later.