How much is your credit card charging you in foreign exchange fees?

Pull up your last business credit card statement if your company pays for goods or services abroad.

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If your business operates internationally—which could be either paying suppliers, managing payroll, or handling cross-border sales—you’re likely losing thousands of dollars annually to FX fees.

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Most Canadian business credit cards charge a quiet 2.5% foreign transaction fee on every overseas payment. 

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That might not sound like much, but for businesses making frequent international transactions, these fees eat into profit margins and increase operational costs significantly.

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The banks justify it with one simple line: “We handle the currency conversion for you.” But that convenience comes at a steep price.

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Dig a bit deeper and you’ll uncover multiple layers of charges:

• Exchange rate markups: A hidden bump on top of the “official” exchange rate.
• Double conversions: Converting CAD to USD, then USD to EUR, adding unnecessary costs.
• Dynamic Currency Conversion (DCC) tricks: Merchants offering to charge you in CAD instead of the local currency, often at inflated rates.

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However, these FX fees can be avoided entirely.

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In this article, we’ll break down how foreign exchange fees work, who profits from them, and how your business can stop overpaying every time it transacts in another currency.

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Methodology

All the numbers and facts here come straight from the source:

• Statistics Canada
• Bankrate
• Nerdwallet

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Key Takeaways

• Most Canadian business credit cards charge a 2.5% foreign transaction fee, which can cost businesses thousands of dollars annually in unnecessary expenses.
• Paying in CAD instead of the local currency when making international purchases often results in inflated exchange rates and extra fees.
• “No FX Fee” corporate credit cards remove the bank’s 2.5% charge but still include Visa/Mastercard’s 1% markup.
• Canadian businesses collectively lose over $10.3 billion annually to exchange rate markup.
• Supplier and vendor payments in foreign currencies often involve multiple conversions, leading to higher costs than expected.
• International payroll payments are subject to bank FX markups, increasing costs for businesses with remote employees or overseas contractors.
• Holding foreign currencies in a multi-currency account eliminates conversion costs and allows businesses to pay international partners directly in their currency.
• Using a corporate credit card with no FX fees can help businesses reduce overhead costs and improve cash flow management.

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Canadian Business Review

Canadian businesses are scaling beyond borders real fast. It’s not just Fortune 500 corporations, 99.8% of Canadian businesses are small and medium-sized enterprises (SMEs).

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Trade is booming. In 2023, Canada’s exports reached $965.1 billion, fueled by manufacturing, technology, and natural resources. But exports are only half the story. 

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Businesses are also importing billions in goods and services, from raw materials to software subscriptions, making international transactions a core part of operations.

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The internet accelerated everything. E-commerce brands ship globally from day one. SaaS companies earn in multiple currencies without ever opening a foreign office.

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Even traditional businesses are plugged into the global supply chain, whether they’re buying components from Asia or contracting freelancers in Europe. The default setting for modern business is international.

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However, money doesn’t move as fast as business does.

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A company in Toronto might be paying a supplier in California, while collecting payments from customers in the UK and settling invoices in Germany. 

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Each of these transactions passes through a financial system that wasn’t built for the speed of today’s global business. 

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Every payment, every conversion, every wire transfer comes with friction—sometimes visible, often buried in the fine print.

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Through these payments, a lot of money is crossing borders—and every time it does, banks and payment processors take a cut. 

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The cost of international business isn’t just in logistics or operations. It’s in how money moves, and how much is lost in the process.

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Most companies don’t notice these costs until they add up. They’re an afterthought, buried in credit card statements and invoice reconciliations. 

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If you’re transacting globally, they’re one of the most silent, compounding expenses in your business.

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The Sneaky Fees Your Business Never Noticed

Banks tell you, in clear terms, that there’s a 2.5% foreign transaction fee on every international purchase. It’s right there in the fine print. And because this number is explicit, it’s the one you pay attention to.

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But what they don’t highlight is that this is just one of two separate markups your business is paying.

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At any given moment, there’s an objective exchange rate between two currencies. It’s called the mid-market rate, the real rate you see when you Google something like “1 USD to CAD.” 

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It’s the rate banks and large financial institutions use when moving billions. It’s also the rate your business will never get.

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Let’s say the mid-market rate is 1 USD = 1.35 CAD. In a perfect world, a $10,000 USD payment to a supplier should cost your business $13,500 CAD. But that’s not how it works.

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Every time your company pays an international invoice, books a corporate trip or settles an overseas subscription, the amount debited from your account doesn’t just depend on the exchange rate. It depends on who is controlling the conversion process—and there are multiple layers to it.

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The most obvious markup? The bank’s 2.5% foreign transaction fee. But before your bank even gets involved, something else happens first.

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The Network Markup (Visa/Mastercard/Amex)

When your business makes a payment in another currency, your credit card doesn’t just send the transaction straight to your bank for conversion. First, it passes through the card network—Visa, Mastercard, or Amex.

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These networks don’t use the mid-market rate. Instead, they apply their own markup—typically over 1% above the real exchange rate.

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That means that before your bank even sees the transaction, the amount you owe has already been inflated by Visa or Mastercard.

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Using the same example, instead of converting your $10,000 USD purchase at the real 1.35 rate, Visa or Mastercard might adjust it to 1.36 or 1.37.

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Now, your $10,000 USD payment has already become $13,600 or $13,700 CAD—before your bank even gets involved.

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That’s an extra $100 to $200 CAD in fees—built right into the exchange rate. And you haven’t even paid your bank’s markup yet.

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The Issuing Bank’s Rate

Once Visa or Mastercard has converted the transaction into Canadian dollars, your bank tacks on its own foreign transaction fee—the one listed in your corporate credit card’s terms and conditions.

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For most Canadian business credit cards, that’s an additional 2.5% on top of the network markup.

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So let’s break it down:

1. Visa or Mastercard inflates the exchange rate—turning a $10,000 USD purchase into $13,700 CAD instead of $13,500 CAD.
2. Your bank then applies its own 2.5% fee—adding another $342.50 CAD in hidden charges.

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Final cost? $14,042.50 CAD.

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Instead of $13,500 CAD, your business just paid $542.50 more than it should have.

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Now multiply that by every supplier payment, every software subscription, every international invoice your company settles each year. 

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That’s thousands—if not tens of thousands—gone straight to FX fees.

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Some business credit cards in Canada market themselves as “No Foreign Transaction Fee” cards.

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The pitch sounds great: “You won’t have to pay the 2.5% bank FX fee.”

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But, these cards still use Visa or Mastercard’s inflated exchange rate.

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So while your business avoids the bank’s 2.5% markup, you’re still paying an extra 1% or more per transaction—baked right into the currency conversion.

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For businesses handling frequent international transactions, these fees don’t just eat into profits, they silently erode your bottom line with every cross-border payment.

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And most companies don’t even realize it’s happening.

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The Real Cost of Foreign Exchange Fees for Canadian

Let’s break it down with real numbers.

• Foreign transaction fee: 2.5% (standard for most Canadian business credit cards)
• Markup from Visa/Mastercard: 1% or more (baked into exchange rates)
• Total FX cost per transaction: 3.5% or more

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Now, let’s put that into perspective with actual business expenses.

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A Canadian company paying a supplier $250,000 USD per year shouldn’t be paying more than $337,500 CAD at an exchange rate of 1.35. But with FX fees, the final cost often looks more like this:

• $250,000 USD at 1.37 (after Visa/Mastercard markup): $342,500 CAD
• Bank’s additional 2.5% FX fee: +$8,562.50 CAD
• Total cost paid by the business: $351,062.50 CAD

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That’s an extra $13,562.50 CAD lost—on just one supplier’s payments.

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Now multiply that across multiple vendors, contractors, and services. A company making $5 million in annual international transactions could easily be losing $175,000 or more per year to FX fees alone.

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Beyond FX Fees: Other Hidden Costs Canadian Businesses Face

The foreign transaction fee isn’t the only way Canadian businesses pay more than expected:

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Dynamic Currency Conversion (DCC)

If an international supplier or merchant offers to bill you in CAD instead of their local currency, it might sound convenient—but it’s actually a trap. This practice, called Dynamic Currency Conversion (DCC), results in an exchange rate that is 5%–7% worse than the mid-market rate.

In other words, instead of letting your bank or payment provider convert the transaction, the merchant does it at an inflated rate—taking a bigger cut while making it seem like a favor. 

Businesses accepting invoices in CAD from foreign suppliers are often unknowingly paying far more than necessary.

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International Wire Transfer Fees

Sending payments via wire transfer? Canadian banks charge between $15 and $50 per transaction—but that’s just the start. On top of that, intermediary banks handling the transaction often take another cut, meaning the recipient may receive less than the full amount.

For businesses making frequent international payments, these fees add up fast, making each transfer an expensive and inefficient way to move money globally.

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ATM Withdrawal Fees

For businesses with employees traveling abroad, ATM withdrawal fees are another hidden cost. Banks charge an average of $4.73 per withdrawal according to Bankrate data, plus the standard 2.5% FX fee—and that’s before the foreign ATM operator tacks on their own surcharge.

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For a company with multiple employees managing expenses on the road, these small charges pile up quickly, silently increasing business travel costs.

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Why Do These Fees Exist?

Foreign transaction fees aren’t just random charges—credit card issuers justify them as necessary for handling international purchases. But what are businesses really paying for?

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Purpose of Foreign Transaction Fees

• Processing International Transactions: When you use your business card abroad or shop online in a foreign currency, the transaction passes through multiple financial networks before reaching your bank. Issuers charge a fee (typically 2.5% in Canada) to cover these network costs.
• Currency Conversion Costs: Converting CAD to another currency isn’t free. Banks and payment processors claim these fees help cover fluctuations in exchange rates. However, they often add a markup on top of the real rate, making the process more expensive for businesses.

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• Risk Management and Fraud Protection: International transactions carry higher fraud risks, and banks argue that these fees help fund fraud prevention and security measures.

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Who Profits from These Fees?

Banks and credit card networks often justify foreign transaction fees as necessary to cover processing and currency conversion costs. However, these fees have become massive profit centers for these institutions.

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In 2024, Visa reported a 12% year-over-year increase in net revenue, reaching $9.6 billion in Q4 alone. Mastercard wasn’t far behind, with net revenue surging 14% to $7.4 billion in the same quarter. A significant chunk of this revenue comes from international transaction fees, including foreign exchange fees.

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Banks and networks both take a cut and it doesn’t stop with the explicit 2.5% FX fee most business credit cards charge. Even when banks offer “no FX fee” cards, businesses are still paying.

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How? Through the network exchange rate markup.

• Every transaction first passes through Visa or Mastercard, which quietly inflates the exchange rate by 1% or more.
• That markup is baked into the conversion before the bank even gets involved.
• So, while a bank may waive its 2.5% foreign transaction fee, Visa and Mastercard still take their cut through a spread on the exchange rate.

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These fees aren’t just covering operational expenses—they’re big business. Visa’s operating margin hit 66% in Q4 2024, while Mastercard’s reached 56.3%, proving just how lucrative these charges are.

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This means that no matter what banks claim, businesses are still paying more than they should every time they transact in foreign currencies. 

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The system is structured so that currency conversion generates profit—but not for the business making the payment.

Why Businesses Don’t See the Real Exchange Rate

Foreign exchange fees aren’t obvious because they aren’t broken out separately on your business credit card statement. There’s no line item for Visa/Mastercard markup or bank FX fee. 

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Instead, everything is bundled into the final amount, making it difficult to see how much extra your business is actually paying.

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When you check your statement, you don’t see:

• $1000 USD purchase
• Converted at 1.37 instead of 1.35 (Visa/Mastercard markup applied)
• Bank’s additional 2.5% FX fee

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You see just the final CAD amount debited from your account—with no breakdown of the hidden costs embedded within it.

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By the time the charge appears on your statement, the network markup has already been absorbed into the exchange rate, and the bank’s FX fee is folded into the transaction total. 

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The numbers look ordinary, but behind the scenes, multiple layers of fees have already been taken—without your business ever knowing exactly how much was lost in the process.

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How to Avoid FX Fees

FX fees aren’t unavoidable. Businesses that take control of their international transactions can eliminate unnecessary markups and keep more money in their accounts.

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Use a Multi-Currency Account

Traditional banks force conversions every time a business receives or spends money in a foreign currency. That means a supplier payment in USD, a payout in GBP, or a transaction in EUR automatically gets converted into CAD with an added bank markup.

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A multi-currency business account changes that. It allows companies to hold, receive, and pay in multiple currencies—without forced conversions or FX fees.

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For example, Loop’s multi-currency account supports USD, GBP, and EUR, giving businesses the ability to transact seamlessly in major global markets without paying the bank’s FX surcharge.

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Benefits:

• Eliminate unnecessary conversion fees by holding funds in multiple currencies.
• Lock in exchange rates when they’re favorable, instead of paying inflated bank rates.
• Avoid reliance on traditional banks that impose high FX markups.

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Get a No-FX-Fee Business Credit Card

Most business credit cards in Canada charge an FX fee of 2.5% on foreign transactions. These costs can be significant over time. 

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Instead, using a no-FX-fee business credit card can eliminate these charges altogether. 

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For instance, Loop’s corporate credit card allows businesses to spend in CAD, USD, GBP, and EUR without FX fees. 

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Benefits:

• Pay directly in supported currencies without conversion costs.
• Save up to 2.5% per transaction compared to traditional credit cards.
• Better budget management for international expenses.

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A Smarter Alternative for Canadian Businesses: Loop

Managing foreign exchange (FX) fees shouldn’t be complicated—but for most Canadian businesses, it is. Traditional banks and credit card networks embed fees, inflate exchange rates, and add unnecessary friction to cross-border transactions. 

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These costs don’t just impact cash flow—they chip away at profit margins without businesses even realizing it.

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That’s where Loop comes in. Loop is designed for businesses that operate globally, offering a seamless, cost-effective solution for managing international transactions without the usual banking headaches.

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Why Loop?

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Eliminate Both Bank and Network FX Fees

Most businesses assume foreign exchange fees are just part of the cost of doing business internationally. They’re not. The key to eliminating them? Avoiding unnecessary conversions altogether.

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Loop allows businesses to spend, settle, and hold balances in multiple currencies—without forced conversions. That means:

•  If you earn in USD, you can spend in USD.
•  If you receive payments in GBP or EUR, you can use those funds directly.
•  No Visa/Mastercard markups. No bank FX fees. Just seamless global payments.

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Full Transparency—No Hidden Fees

Traditional banks and credit card providers don’t disclose how much they’re taking in FX fees. The small percentages may seem insignificant, but over time, they add up to thousands of dollars in unnecessary costs.

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Loop removes the guesswork by offering:

• Real, competitive exchange rates with no surprise deductions.
•  Clear, upfront pricing so businesses always know what they’re paying.
•  A direct alternative to bank-controlled FX conversions.

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Hold and Spend in Multiple Currencies

Most banks automatically convert foreign currency earnings into CAD, forcing businesses to lose money on every conversion. 

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Even if your company receives payments in USD, EUR, or GBP, traditional banks won’t let you hold those currencies without converting them first.

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Loop changes that. With a Loop multi-currency account, businesses can:

• Hold USD, GBP, and EUR without forced conversions.
• Pay suppliers, employees, and partners directly in the currency they need.
• Eliminate unnecessary FX costs and improve international cash flow.

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Effortless Global Spending Without Banking Red Tape

Loop strips away the inefficiencies and gives businesses what they actually need:

• A streamlined, integrated platform for cross-border payments.
• The ability to send, receive, and settle transactions in multiple currencies
• Zero hidden markups, zero forced conversions, and no surprise deductions.

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Built for Global Businesses

Loop isn’t just another FX-free card—it’s a financial infrastructure for modern businesses. 

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Whether your company sources international suppliers, pays overseas employees, or operates in multiple markets, Loop is designed to eliminate hidden FX costs, maximize financial control, and keep more of your money where it belongs—in your business.

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Stop paying outdated banking fees. Loop gives you the freedom to choose how you hold, spend, and settle your money—on your terms.

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Setting Up Loop Takes Minutes

Getting started with Loop is quick and hassle-free. In just a few minutes, your business can access a suite of financial tools designed to streamline international transactions and eliminate unnecessary FX fees.

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Step 1: Visit the Loop Website

Go to bankonloop.com to begin the registration process.

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Step 2: Sign Up for an Account

Click the "Get Started" button on the homepage. Enter your business details, including your name, email address, and company information.

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Step 3: Verify Your Identity

For security purposes, Loop requires identity verification. Simply upload the necessary identification documents, and the system will process them quickly to ensure you can start using your account without delays.

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Step 4: Set Up Your Multi-Currency Wallet

Once your account is verified, set up your multi-currency wallet. This feature allows your business to hold and manage CAD, USD, EUR, and GBP without forced conversions. Select the currencies based on your company’s international payment needs.

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Step 5: Order Your Loop Global Visa Card 

With your wallet set up, you can order your Loop Global Visa Card, enabling your business to spend in multiple currencies with zero FX fees. Choose between a physical card for in-person payments or virtual cards for online transactions.

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Step 6: Customize Your Spending Controls

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Adjust your account settings to match your business needs. Set transaction limits, monitor expenses, and control spending across employees and departments. Loop’s spend management tools give you full visibility over global payments while keeping costs under control.

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Your business is now ready to transact globally—without hidden FX fees, inflated exchange rates or unnecessary banking friction.

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Get started now and start saving on every transaction.

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