As I often explain, the AUS dollar exchange rates you hear quoted in news reports refer to the rates between countries or the market rate.
Banks and others who deal in huge volumes of currency, pay a little more than the market rate.
For example, if the market rate for the USD against the AUD is .88, the wholesaler might only receive .8795 cents for one AUD.
Next in the chain is the retailer who may only receive USD.8750 for one AUD.
The consumer may only receive .8725cents for his one AUD.
This margin is how the money exchanger makes money. What cannot be sold to other customers is sold to wholesalers. Margins vary from one retail exchanger to the next but those margins are adequate to allow a profit.
Charging a fee or commission is icing on the cake and amounts to nothing more than loading the rate to a greater or lesser extent. And, if you’re exchanging a lot of money or buying several currencies, the total fees become an unnecessary burden.
Retailers are required to disclose that they are charging a commission or fee. It’s always in the small print! When at the window, always ask if there is a fee or commission. If there is, look for another exchange shop. However, make sure the rates remain competitive.
Remember, when buying foreign currency, the higher the rate, the better. It means that you are receiving more of the foreign currency per dollar than you would if the quoted rate is lower.
When selling foreign currency, you want the rate as low as possible.
All retailers are happy to buy back what you don’t spend, although usually not coinage.
The golden rule: Don’t pay fees or commission on foreign dollar exchange transactions. Check the small print!