Bank Exchange Rate Markups: What Canadian Businesses Are Really Paying

What Is the Mid-Market Rate?

The mid-market rate, also known as the interbank rate, is the "real" exchange rate between two currencies. It’s the midpoint between the buy and sell prices quoted by global financial institutions at any given moment.

This rate reflects the actual market value of a currency pair, without any markup or margin added. It’s the rate you’ll typically find on platforms like XE.com, Reuters, or Google Finance.

For example, if the mid-market rate for CAD to USD is 0.74, this means 1 Canadian dollar is worth 74 US cents before any service provider adds their fees.

Check out our currency converter for more information and real time rates now!

Why It Matters

Most Canadian businesses never actually receive the mid-market rate. Instead, traditional providers, whether legacy financial institutions or payment processors, build their fees directly into the rate they quote. This makes it harder to see what you’re really paying.

Knowing the mid-market rate gives you a baseline for comparison. It’s the only way to calculate how much margin is being added to your foreign exchange transactions.

How Traditional Providers Add Hidden Markups

When a provider quotes you an exchange rate, it often looks like a fair deal, especially if there’s “no fee” listed. But in most cases, the real cost is hidden inside the rate itself.

Here’s how it works:

Let’s say the mid-market rate for USD to CAD is 1.35. Your provider offers you 1.31. That 4-cent difference per dollar might not seem like much, but on a $100,000 transfer, it adds up to over $2,960 in markup costs.

How Big Are These Markups?

In Canada, traditional FX markups can range anywhere from 2% to over 4%, depending on:

• The currency pair (exotic currencies usually mean higher markups)
• Your transaction volume (lower volume often = higher rates)
• Whether you're using wire, SWIFT, or intermediary banks

Many providers avoid mentioning this spread at all, focusing instead on “no transfer fee” headlines. But the markup is often the most expensive part of the transaction.

Why It’s Hard to Spot

Most providers don’t show the mid-market rate alongside their quote. That lack of transparency makes it difficult for businesses to audit or challenge the true cost.

Venn, by contrast, charges a flat 0.25% FX margin above the mid-market rate for supported currencies, including CAD, USD, GBP, and EUR, making the real cost visible and predictable.

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How to Calculate Your FX Markup

Want to know what your FX provider is really charging you? Here's how to calculate it in under 2 minutes.

Step-by-Step Method

Step 1: Get the mid-market rate
Check a trusted source like XE.com, Google, or the Bank of Canada. This is your baseline.

Step 2: Get your provider’s quoted rate
This is the rate you’ve been offered for the transaction.

Step 3: Use this formula
To find the markup percentage, plug the numbers into:

((Mid-Market Rate – Your Rate) / Mid-Market Rate) × 100

Example

Let’s say the mid-market rate is 1.3500 USD/CAD
Your provider offers 1.3150

Markup = ((1.3500 – 1.3150) / 1.3500) × 100 = 2.59%

On a $20,000 USD transfer, that’s $518 in hidden costs, just from the rate.

What This Doesn’t Show

This formula only captures the FX markup. Some providers also charge:

• SWIFT transfer fees
• Receiving bank fees
• Conversion timing spreads

That’s why transparency matters, without the mid-market rate as a reference point, you can’t audit what you’re really paying.

Hidden FX Fees Most Canadian Businesses Miss

Even if you're watching the exchange rate closely, there's a good chance you're still overpaying, thanks to a stack of hidden fees that don’t show up in the quote.

Here are the most common ones affecting Canadian businesses:

1. Intermediary (SWIFT) Bank Fees

If your provider relies on the SWIFT network to move funds, your payment may pass through one or more intermediary banks. Each one can deduct $15 to $50 from your transfer, without warning.

Venn routes payments through local rails wherever possible, avoiding the SWIFT network for supported currencies.

2. Receiving Bank Fees

Even if you’re sending money from one USD account to another, traditional Canadian financial institutions may charge inbound wire fees, sometimes as high as $17 CAD, even for what looks like a domestic transfer.

Because Venn provides true local USD accounts, you can receive USD transfers via ACH without wire fees or SWIFT delays.

3. Timing Delays

Some providers hold funds before converting or transferring, exposing your business to rate fluctuations. If conversion happens days later, you could be paying based on a less favourable rate, without knowing.

Venn settles most transfers the same or next business day, and shows you the live rate before you commit.

4. Cross-Border Platform Fees

If you're using platforms like Stripe, PayPal, or Shopify to receive funds in a foreign currency, you may face 1.5% cross-border fees just to move your money into a CAD account.

With Venn, you can receive USD, CAD, GBP, and EUR directly, so you skip the FX conversion and avoid cross-border fees entirely.

The Venn Advantage: Transparent FX for Canadian Businesses

At Venn, we believe Canadian businesses deserve clarity, control, and cost-efficiency when moving money internationally. That’s why we’ve rebuilt the infrastructure to do what others can’t. Learn more about the cheapest way for Canadians to send money internationally here.

Local Accounts = Real Savings

Venn gives you actual local accounts in CAD, USD, GBP, and EUR, not virtual IBANs or SWIFT-only workarounds. That means:

• Receive ACH payments in the U.S. with no cross-border markup
• Pay suppliers or team members in their local currency without intermediary bank fees
• Avoid the 1.5% cross-border fee when withdrawing from Stripe, Shopify, or PayPal

With Venn, you get paid like a local, because you are one.

FX Markups That Don’t Eat Your Margin

Venn applies a flat 0.25% FX margin on supported currency pairs, one of the lowest available to Canadian SMEs. No bundling, no hidden spreads, no surprises.

• Mid-market rate shown upfront
• Transparent conversion cost at point-of-transfer
• Live rate lock before you approve

Faster Settlement, Smarter Routing

While most providers rely on slow SWIFT corridors, Venn routes payments via faster local rails, so your recipients get paid in 1–2 business days, not 3–5.

You can also:

• Send Interac e-Transfers
• Automate payments from QuickBooks or Xero
• Manage payables, payroll, and expense cards from one place

Venn’s platform turns FX from a leak in your margins into a strategic edge for scaling globally.

Final Takeaways on FX Transparency for Canadian Businesses

Foreign exchange costs are one of the least visible but most impactful expenses for Canadian businesses operating across borders. For years, traditional providers have wrapped hidden markups and network fees into the fine print—leaving founders, finance leads, and controllers with limited visibility into the true cost of doing business globally.

But the landscape has changed.

With access to mid-market rates and the ability to compare FX providers in real time, businesses now have the tools to make smarter, faster, and more transparent decisions. And when you’re dealing with thousands, or hundreds of thousands, of dollars in international transfers each year, even small improvements in FX efficiency can unlock meaningful savings.

At Venn, we believe that cross-border payments shouldn’t come with compromises. That’s why we’ve built a platform that not only eliminates the guesswork from FX pricing but also equips Canadian businesses with real infrastructure, like true local USD and CAD accounts, real-time rate transparency, and automation tools that integrate directly with your financial operations.

The result? Less time spent chasing wire receipts. More control over your margins. And a financial partner that doesn’t profit from your lack of visibility.

The era of opaque foreign exchange is ending. And the businesses that make the switch now will be the ones best positioned to grow globally, without losing money to unnecessary markups.

FAQ

Q. What is an exchange rate markup?

A. An exchange rate markup is the difference between the real mid-market rate and the rate your provider offers. Instead of charging a separate fee, many institutions build their profit directly into the conversion rate, often without disclosing it.

Q. How can I tell if I’m being charged a markup?

A. Compare the rate your provider offers to the mid-market rate available at the same time on platforms like XE.com or OANDA. A consistent gap of 1–3% likely reflects a built-in markup.

Q. Why do Canadian businesses pay extra for USD transfers?

A. Most Canadian financial institutions use the SWIFT network for USD transfers, even within North America. This can result in inbound wire fees, slow delivery, and poor FX rates. Providers like Venn offer local U.S. accounts to avoid these costs.

Q. What’s the average FX markup from banks?

A. Traditional banks may apply FX markups ranging from 2% to 4%, depending on the currency pair and transaction size. Some fintechs advertise 0.3%–0.6%, but actual rates may vary. Venn charges a flat 0.25% FX margin for supported currencies.

Q. What’s the difference between mid-market rate and retail FX rate?

A. The mid-market rate is the midpoint between buy and sell prices on global currency markets, essentially the “real” exchange rate. The retail FX rate is what you actually get from a provider, which typically includes a markup.

‍_{This publication is provided for general information purposes and does not constitute legal, tax or other professional advice from Venn Software Inc or its subsidiaries and its affiliates, and it is not intended as a substitute for obtaining advice from a financial advisor or any other professional. We make no representations, warranties or guarantees, whether expressed or implied, that the content in the publication is accurate, complete or up to date.}