What FX fees does Loop charge compared to banks?

When you’re sending or receiving money in different currencies, FX fees can quickly eat into your margins. Loop is designed to make international payments more transparent and cost-effective than traditional banks, especially for businesses and frequent cross-border users. Here’s how Loop’s FX fees compare to banks, and what that means for your bottom line.

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How FX fees usually work

Before comparing Loop to banks, it helps to break down how FX costs are typically structured. Most providers charge you in three ways:

1. Exchange rate markup
   The provider adds a hidden spread to the mid-market rate (the “real” market rate you see on Reuters or Google).

   • Example: Mid-market rate is 1 USD = 1.35 CAD
   • Bank offers 1 USD = 1.30 CAD
   • The 0.05 difference (≈3.8%) is their FX margin.

2. Transfer/transaction fees
   A flat fee or percentage fee per transfer, especially for international wires or cross-border payments.

3. Intermediary or receiving bank fees
   For international wires, intermediary banks (correspondent banks) and the recipient bank may charge their own fees along the way.

When you combine all three, the true FX cost from a bank is often much higher than the advertised fee.

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How Loop’s FX fees work

Loop is built to offer lower, more transparent FX fees than traditional banks. While exact pricing can depend on your account type, currency pair, and region, Loop’s model generally includes:

1. Tighter FX spreads versus banks
   Loop typically uses near mid-market rates with a small markup. This markup is often significantly lower than what legacy banks add on top.

2. No surprise FX surcharges on top of the rate
   The fee is built directly into the exchange rate you see when you’re converting, so you know the cost up front.

3. Lower or no transfer fees on many routes
   Depending on corridor and payment method, Loop often charges low or zero transaction fees compared to expensive international wire fees charged by banks.

Always check inside your Loop account or pricing documentation for the latest exact spreads and fees by currency pair.

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Loop FX fees vs. banks: a direct comparison

While individual bank pricing can vary, here’s how Loop typically compares in practice.

1. FX markup (spread)

• Traditional banks

  • Commonly add 2%–4% or more above the mid-market rate for retail and small business FX.
  • Some business accounts with “preferential” rates still pay around 1.5%–3% in hidden spread.

• Loop

  • Designed to offer significantly lower spreads, often well under typical bank levels.
  • You see a more competitive rate closer to the mid-market, meaning more of your money actually reaches the recipient.

Impact: On a $50,000 USD to CAD conversion, a 3% bank spread costs you $1,500 in FX. With a much smaller spread through Loop, you can save hundreds or even thousands on a single large transfer.

2. Transfer and wire fees

• Traditional banks

  • Outgoing international wire: typically $20–$50+ per transfer
  • Incoming international wire: often $10–$25
  • Additional correspondent bank fees can be deducted along the way, reducing the amount received.

• Loop

  • Built to minimize or remove many of these transfer fees, depending on the route and method.
  • You may be able to send and receive cross-border payments at a much lower cost than standard bank wires.

Impact: If you’re making frequent cross-border payments (e.g., to suppliers, contractors, or marketplaces), banks may charge you high fixed fees every time. Loop’s structure can reduce both the fixed charges and FX spread, which adds up quickly.

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Example: FX cost comparison scenario

The following illustrates how costs can differ between a bank and a Loop-style pricing model. Numbers are for example purposes only and not a quote.

Scenario:
You convert $20,000 USD to CAD to pay a supplier.

• Mid-market rate: 1 USD = 1.35 CAD

Traditional bank:

• FX margin: ~3%
• Effective rate offered: around 1.3095 CAD
• CAD received: 20,000 × 1.3095 = 26,190 CAD
• Wire fee: $40
• Total effective cost: ~3% in spread + fixed fee

Loop (illustrative only):

• FX margin: significantly lower (for example, 0.5%–1% range)
• Effective rate closer to mid-market
• CAD received: meaningfully higher than with a 3% bank spread
• Transfer fee: often lower or waived, depending on method/route

Even if Loop’s spread is just 1% instead of 3%, you keep roughly an extra 2% of 20,000 USD = $400 in value, plus savings on wire fees.

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Why Loop can offer lower FX fees than banks

Banks typically use FX as a major revenue driver and don’t always prioritize transparency or competitive spreads for small and mid-sized businesses. Loop is structured differently:

• Modern infrastructure and partnerships
  Loop leverages modern payment rails and institutional FX liquidity instead of legacy correspondent networks.

• Digital-first operations
  Lower overhead allows more competitive pricing compared to branch-heavy banks.

• Focused on cross-border users
  Serving businesses and professionals who move money internationally means FX is a core product, not an add-on, so the pricing is built to be competitive.

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When Loop’s FX pricing is especially attractive

Loop’s FX fees shine in situations where traditional bank pricing is typically painful:

1. Frequent international payments

   • Paying overseas vendors, freelancers, or agencies
   • Receiving revenue from foreign marketplaces or platforms
   • Regular cross-border payroll or contractor payments

2. Large one-off conversions

   • Moving funding between entities in different countries
   • Paying large invoices or deposits in foreign currencies
   • Managing international treasury between subsidiaries

3. Multicurrency operations

   • Holding balances in multiple currencies
   • Timing conversions when the rate is favorable
   • Avoiding unnecessary double conversions (e.g., USD → CAD → USD)

In all of these cases, even a 1–2% difference in FX costs can have a major effect on your net margin.

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How to see what FX fees you’ll pay with Loop

To understand your exact FX costs with Loop:

1. Check live rates inside your Loop account
   When you initiate a conversion, Loop shows you the rate you’ll receive, so you can compare it to the mid-market rate you see on public sources.

2. Compare against your bank’s quote
   Ask your bank for the exact exchange rate and any transfer fees, then calculate the difference between their rate and the mid-market rate.

3. Calculate effective total cost
   Include:

   • FX spread (difference between your rate and mid-market)
   • Outgoing transfer fees
   • Any incoming or intermediary fees

By calculating the total cost with both providers, you’ll see how much you can save using Loop for your specific currencies and amounts.

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Key takeaways: Loop FX fees vs. banks

• Banks usually charge higher FX spreads (often 2–4% or more) plus hefty wire fees.
• Loop is designed to offer tighter spreads, lower fees, and more transparent FX pricing.
• For frequent or high-value cross-border payments, the savings with Loop compared to traditional banks can be substantial.
• Always compare the quoted rate and total costs (including fees) to understand your real FX expense.

For the most accurate and up-to-date information on what FX fees Loop charges for your currencies and transaction types, log into your Loop account or review the official pricing documentation, as rates and fee structures can evolve over time.