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Let's say I exchange 10 USD to EUR. For example 1 USD = 0.78 EUR. So, exchange rate is 0.78. In this case: 10 USD = 7.8 EUR.

I also take a fixed service fee, e.g. 0.5 EUR. Fee is the same for any exchange amount. So final amount is: 7.8 EUR - 0.5 EUR = 7.3 EUR.

Can I integrate fixed service fee in exchange rate? I can't simply subtract fee from exchange rate as I'll lose precision.

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  • $\begingroup$ Clearly not. If you are exchanging $\$1$, the exchange fee dominates. If are you exchanging $\$1$ million the exchange fee is negligible. $\endgroup$
    – lulu
    Commented Oct 9, 2018 at 22:14

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No, you can't because the fee is a fixed amount. If you exchange $20$ USD you would get $15.6$ EUR before the fee, and $15.1$ EUR after the fee. You are exchanging twice the dollars but getting more than twice the euros because the fee has less impact at the amount goes up.

If you try to incorporate the fee into the rate, the rate on $10$ USD is $0.73$ while on $20$ USD it is $0.755$

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