“Foreign exchange commission”

definition

In foreign exchange, the commission is the fee charged for the service of carrying out a foreign currency exchange transaction.

Commissions are the primary source of profit for an FX provider. Every time a company exchanges foreign currency or makes a cross-border payment, they pay a commission to the provider, though this commission is sometimes not explicit. The commission may also vary substantially from one provider to the other as well as from transaction to transaction, even with the same provider.

With many FX providers, the commission is hidden to the customer and included in the exchange rate, known as the spread. The spread may vary considerably from provider to provider, with commissions as high as 3.39% charged by some business FX brokers.

To be completely certain of the total commission charged, the company must ascertain the mid-market rate (the authentic market rate at any given time), ensure it is the live rate and not a daily quote, and benchmark the rate offered by the FX provider against the live mid-market rate.