What's currency conversion? Understanding conversion rates and fees

Whether you're booking a trip, shopping online from an international retailer, or sending money to family, currency conversion is an everyday reality in the global economy. It's simply the process of exchanging one country’s money for another's, such as swapping your British pounds (GBP) for euros (EUR) or US dollars (USD).

While the concept is straightforward, the mechanism behind it can be confusing. You might've noticed that the rate you see on a currency converter may differ from the rate your bank offers. This discrepancy is often due to additional fees, mark-ups, and transaction times.

To master your global finances, you need to understand how currency conversion works. We’ll guide you through the process, explaining the key terms, showing you the costs to watch out for, and demonstrating how we make exchanging money easier and simpler for millions of customers.

Curious how much you could save on your next international transfer? Check out our exchange rate comparison guide.

Currency exchange in 36 currencies with the Revolut exchange rate. Fair usage limits and weekend fees may apply, depending on your plan. Exchange rates are dynamic. Always remember to check the applicable rate in-app before carrying out your exchange.

The basics of currency conversion

An informed decision about converting your money starts with knowing some key terms. These describe how money moves across borders.

What's an exchange rate?

The exchange rate is the price of one currency in relation to another. For example, if the rate for EUR to GBP is 0.85, it means that one euro will cost you 85p.

This rate is in constant motion, fluctuating minute-by-minute based on trading activity in the global market. The rate is always quoted as a currency pair, which shows how much of the second currency is needed to buy one unit of the first.

What's a fiat currency?

This is money that a government has deemed legal tender, but that has no physical backing like gold or silver. The value of a fiat currency comes from the trust and stability of the issuing government and economy.

Nearly all modern world currencies, including the pound (GBP), the US dollar (USD), and the euro (EUR), are fiat currencies. Their values are constantly traded against each other in the currency exchange market.

Understanding currency pairs

Currency conversion rates are always listed as pairs, such as GBP to USD or EUR to CAD. In any pair, there are 2 components:

• Base currency: the first currency listed, representing one unit that you're buying or selling
• Quote currency: the second currency listed, showing the amount of the currency needed to get one unit of the base currency

For instance, a GBP to USD rate of 1.25 means you can exchange £1 (the base currency) for $1.25 (the quote currency).

How currency conversion rates are determined

Exchange rates aren't static prices. They're dynamic and always changing according to world events, economic data, and the simple rule of supply and demand.

Supply and demand in the global market

The foreign exchange market is the largest financial market globally, driven by the actions of massive players like governments, central banks, large commercial banks, and corporations.

The underlying principle is simple: if a country's economy is doing well, demand for its currency generally increases as more people want to invest there. This higher demand drives the currency's value up. On the other hand, negative economic news or political uncertainty usually reduce demand, causing the currency's value to drop. These ever-changing market forces decide the real value behind the process of currency conversion.

Curious about foreign exchange (FX) and want to know more about it? Check out our guide: What's FX?

The mid-market rate explained

The mid-market rate is the middle point between the best price to buy and the best price to sell for a currency pair on the global market at any given time.

It's the most accurate way to show how much a currency is worth. Large financial institutions use this rate when trading between themselves. It's the benchmark rate you should aim to get as close to as possible when converting your money.

At Revolut, we aim to provide competitive and clear exchange rates. Our Revolut exchange rate includes a small mark-up. Fair usage limits and weekend fees may apply as well, depending on your plan.

Using the Revolut currency converter

An online currency converter is essential for anyone wanting to use another currency, whether for a holiday or a transfer. However, not all converters are created equal. It's important to know if the rate you're seeing is the rate you'll get.

The difference between the quoted rate and the final rate

Most independent currency converter websites display the mid-market rate. This is helpful for comparison, but it doesn't include the profit margins or fees added by the service provider.

A traditional bank or exchange bureau may take the mid-market rate and add an additional mark-up before offering you a final, less favourable rate. This is the difference between the quoted rate and the final rate.

At Revolut, we aim to provide competitive and clear exchange rates. We show you the live conversion rate and any applicable fees (like a weekend surcharge) clearly in-app before you make the conversion, so you always know the exact final amount.

Why historical data can help you plan

While we always show you the current rate, watching how a currency converter tool has tracked rates over time can give you a better sense of value. Knowing the historical range allows you to:

• Identify volatility: see how much a currency fluctuates, helping you decide if you should convert money now or wait
• Set expectations: understand what a competitive rate looks like compared to the average over the last few months

Using a clear currency converter helps you lock in a good rate when the time is right, rather than relying on a potentially worse rate at the time you need the money. With our app, you can hold 36 currencies in your account, allowing you to convert money when you're happy with the exchange rate and hold it until your next trip or money transfer.

Currency conversion fees and mark-ups

When exchanging money through some providers, the price you pay is rarely just the mid-market rate. Most services include additional costs, either as a separate fee or as a mark-up added to the exchange rate itself. Understanding these costs is key to finding the best way to change currency.

Mark-up fees and how to spot them

The most common way for providers to make money from currency conversion is by offering a slightly worse exchange rate than the mid-market rate. This difference is called the spread or mark-up.

How to spot a mark-up:

1. Check the live mid-market rate on an independent site
2. Check the rate offered by your provider
3. The difference is the mark-up fee, which is baked into the rate, meaning you receive less of the foreign currency for your money

Transaction and intermediary fees

Beyond the exchange rate mark-up, you may encounter other, more obvious fees:

• Transaction fees: some services charge a flat fee or a percentage fee simply for processing the exchange, especially for international transfers.
• Intermediary bank fees: for international transfers, traditional systems may use a network of correspondent (intermediary) banks, each of which can take a fee from the transfer amount. These are often out of your control and can reduce the final amount received by the recipient.

With Revolut, you won’t have any surprises on your fees and exchange rates, as we always show all fees in-app before you hit Send. Fair usage limits apply.

Remember, you can compare how our exchange rates and fees stand against other services with our exchange rates comparison guide.

Frequently asked questions about currency conversion

Many of the questions we get are about how to manage money while travelling abroad. Here we answer the most common customer queries.

What's the currency conversion rate you actually get?

The final rate you get is a combination of the Revolut competitive rate and any fees or surcharges applied. The rate our customers get is competitive, and often very close to the mid-market rate.

However, 2 factors may influence the final cost:

• Weekend surcharge: if you convert money during a time when the currency exchange market is closed (typically on weekends), a small percentage surcharge may apply, depending on your plan.
• Plan limits: depending on your plan, there's a set monthly allowance for fee-free currency exchange at the competitive rate. Exchanges above this limit may incur a fair usage fee.

Compare our plans to learn more about fees and the fair usage limits they allow.

Will I be charged for using my card abroad?

Using your card abroad is a major component of currency conversion. Some traditional banks charge a non-sterling transaction fee, which is a percentage of the purchase amount, every time you use your card in a foreign currency.

We don't charge these standard non-sterling transaction fees when you spend with your card. We process the conversion automatically at a competitive rate if you don’t already hold the currency in your account.

ATM fees and cash withdrawals overseas

While travel card payments are a convenient way to spend money in a different currency, you may occasionally need local cash. When withdrawing money from an ATM abroad, be aware of 2 potential charges:

• Revolut ATM fees: our customers have a set allowance for free ATM withdrawals each month, which depends on their plan. After this limit is reached, fees apply.
• Local ATM operator fees: the local ATM owner may charge their own fee for using their machine, regardless of your provider. This fee is outside our control and should always be displayed on the ATM screen before you accept the transaction. You can locate ATMs nearby in-app and filter for our in-network ATMs to avoid third-party surcharges.

No fees charged by Revolut within plan limits.

Travelling with Revolut

Preparation is key to a stress-free trip, and that includes preparing your finances. Our app features are designed to give you control and clarity.

How to set a budget and avoid overspending on holiday

A great way to manage your holiday finances is to set up a dedicated travel budget. Before you even leave the country, you can:

• Convert and hold: use the in-app exchange feature to convert the specific amount you plan to spend into the local currency and hold it in a separate currency Pocket. This locks in your rate and helps you mentally separate your holiday money from your everyday money.
• Use budgeting tools: we offer budgeting tools that help you track transactions in real-time. You can set spending limits for specific categories, like restaurants or shopping, to help you stick to your holiday budget.

These steps will help you control your money and stop you from worrying about currency conversion costs while you're away.

How to convert currency with Revolut

Ready to start converting money simply and clearly? Getting started with us is easy and fast.

1. Download the app and follow the steps to sign up for Revolut. You'll need to complete our identity checks, which usually only take a few minutes.
2. Add money to your GBP account via card or transfer.
3. To convert currency in-app, tap More, then Exchange.
4. Select the currencies you want to convert (e.g. GBP to EUR) among the dozens of currencies you can hold in-app.
5. Enter the amount you want to exchange.
6. We'll show you the conversion rate and the final amount you'll receive in the new currency.
7. Tap to confirm the exchange, and the new currency will appear in your account right away.
8. You can now use this converted balance to spend with your card, send money abroad, or hold it for your next trip.

18+. T&Cs and fees apply.

Fair usage limits and weekend fees may apply, depending on your plan.

The information provided is accurate as of 18 November 2025.

The content of this page is for general information purposes only and does not constitute financial advice. If you have any questions about your personal circumstances, please seek professional and independent advice. Revolut is not a financial adviser.