When you send money internationally, your bank or transfer service typically charges you two things: a visible fee (the wire transfer fee, often $25–$50) and an invisible fee — a markup of 1.5 to 3 percent hidden inside the exchange rate itself. This invisible fee is called the FX markup, and it costs consumers billions of dollars every year.
In this guide, we'll show you exactly how the markup works, how to spot it in seconds using free tools, and how to choose a transfer service that won't rip you off on the exchange rate.
How the FX markup works
When you send $1,000 from your US bank account to a recipient in the Eurozone, here's what actually happens:
- Your bank takes $1,000 from your account.
- Your bank looks up the live mid-market USD/EUR rate — let's say it's 0.8900 (so $1,000 should equal 890 EUR).
- Your bank applies its markup — typically 2.5%. So instead of giving your recipient 890 EUR, they give them
890 × 0.975 = 867.75 EUR. - Your bank charges you a separate wire transfer fee of $35.
- Your recipient receives 867.75 EUR — 22.25 EUR less than they should have.
On a $1,000 transfer, the total cost is $22.25 (markup) + $35 (wire fee) = $57.25 — about 5.7% of the transfer amount. For a $10,000 transfer, that scales to $222.50 + $35 = $257.50 (2.6%). For $100,000, it's $2,225 + $35 = $2,260 (2.3%).
The markup scales with the transfer amount, which is why it's so important for larger transfers — a $1,000 transfer loses you $22, but a $100,000 transfer loses you $2,225. For businesses with regular international payables, this can add up to tens of thousands of dollars per year in pure hidden cost.
How to spot the markup in 3 steps
Here's a quick workflow to spot the markup on any international transfer:
Step 1: Find the live mid-market rate
Use a free tool like Toolhub's USD to EUR converter, which shows the live mid-market rate (refreshed every few minutes from open.er-api.com). The rate shown is the "real" rate — the same number Bloomberg and Reuters display.
Step 2: Get a quote from your provider
Ask your bank or transfer service for the effective rate — the actual rate they'll apply to your money when the transfer executes. This is different from the "indicative rate" on their marketing site, which is often stale or rounded favorably.
Step 3: Calculate the markup
Use this formula:
markup % = (mid_market_rate - quoted_rate) / mid_market_rate × 100
For example, if mid-market USD/EUR is 0.8900 and your bank quotes 0.8650:
(0.8900 - 0.8650) / 0.8900 × 100 = 2.81% markup
Typical markups by provider (2026)
We've surveyed the major international transfer services to give you a sense of typical markups. Note: these are typical values — actual markups vary by corridor, transfer size, and time of day.
| Provider | Markup vs. mid-market | Wire fee | Total cost on $1,000 |
|---|---|---|---|
| Chase / BofA / Wells Fargo | 2.5–3.5% | $40 | $65–$75 |
| HSBC / Barclays / Lloyds | 2.0–3.0% | £25 | £45–£55 |
| PayPal (international) | 3.5–4.5% | $0 + 4% cross-border fee | $75–$85 |
| Western Union (in-person) | 3.0–5.0% | $5–$15 | $35–$65 |
| Wise (formerly TransferWise) | 0.4–0.7% | $0–$3 | $7–$10 |
| Revolut (Premium, weekday) | 0.0–0.5% | $0 | $0–$5 |
| Remitly (Economy) | 1.0–2.0% | $3–$5 | $13–$25 |
The pattern is clear: traditional banks are 3–5x more expensive than online-first services. On a $1,000 transfer, you can save $50–$70 by choosing Wise over your bank. On a $10,000 transfer, you can save $200–$300. On a $100,000 transfer, $2,000–$3,000.
Choosing a transfer service
For most consumer transfers under $10,000 equivalent, here's our recommendation tree:
Within the EU (EUR to EUR)
Use SEPA — it's free under EU regulation 924/2009 and settles same-day. Most bank accounts in the EU support SEPA Instant for €1–€2 fixed. There's no excuse to use anything else for EUR-to-EUR transfers.
Within the US (USD to USD)
Use ACH — free, settles in 1–3 business days. For same-day settlement, use a wire transfer (your bank may charge $25–$50, but at least there's no FX markup since both sides are USD).
Cross-currency (USD to EUR, GBP to USD, etc.)
For cross-currency transfers, our recommended services (in order of cost):
- Revolut Premium/Pro ($10/month) — free transfers at mid-market rate on weekdays for major corridors. Best for frequent transfer users.
- Wise — pay-as-you-go, ~0.5% + small fixed fee. Best for occasional users who don't want a subscription.
- Remitly Economy — competitive for specific remittance corridors (e.g., USD to India, USD to Philippines). Slightly higher markup but faster settlement for some corridors.
- Your bank's wire transfer — last resort. 3–5x more expensive than Wise, with no benefit other than not having to sign up for a new service.
What about PayPal?
PayPal is convenient but avoid it for international transfers. Their cross-border fee is 4% on top of an FX markup that can be 3.5–4.5%. On a $1,000 transfer, you can lose $75–$85 in fees. Use Wise or Revolut instead.
Red flags: how to know you're being ripped off
Watch for these marketing tactics that hide FX markups:
- "Zero fees" — usually means the markup is baked into the rate. Always compare the effective rate to the mid-market rate.
- "Special today: 1 USD = 0.85 EUR" — if the mid-market rate is 0.89, that "special" rate is a 4.5% markup. There's no such thing as a "special" mid-market rate.
- "No commission" — commission is a different concept from markup. A no-commission transfer can still have a 3% markup on the rate.
- "Guaranteed rate" — guaranteed rates are typically worse than mid-market, because the provider is taking on currency risk. Only use guaranteed rates for time-sensitive business transactions where predictability matters more than the small extra cost.
- "Today's rate" on a marketing page — these are often stale and don't reflect the rate you'll actually get. Always ask for the "effective rate" at the time of the transfer.
Case study: $5,000 USD to EUR transfer
Let's run the numbers on a real-world $5,000 USD to EUR transfer, comparing three options:
| Provider | Rate quoted | Markup | Fee | Recipient receives | Total cost |
|---|---|---|---|---|---|
| Bank wire | 0.8650 | 2.81% | $40 | 4,325 EUR | $180.50 |
| Wise | 0.8860 | 0.45% | $3 | 4,430 EUR | $25.50 |
| Revolut Premium | 0.8895 | 0.06% | $0 | 4,447.50 EUR | $3.00 |
In this case, choosing Revolut Premium over your bank saves you $177.50 on a single $5,000 transfer. The recipient gets an extra 122.50 EUR. On a $50,000 transfer, the savings scale to $1,775.
Conclusion
The FX markup is the single biggest hidden cost in international money transfers — and the easiest to avoid. By knowing the mid-market rate (visible on every Toolhub currency page) and choosing a low-markup provider like Wise or Revolut, you can save hundreds of dollars per transfer.
Before your next international transfer:
- Check the mid-market rate on Toolhub's USD to EUR page (or whichever pair you need).
- Get a quote from 2–3 providers (your bank, Wise, and one other).
- Calculate the markup for each.
- Choose the provider with the lowest total cost (markup + fees), not the one with the lowest "fees."
That's it. It takes 5 minutes, and it'll save you real money on every international transfer for the rest of your life.