FX markup (foreign exchange markup) is the additional fee or percentage that a financial institution, broker, or payment provider adds to the base or interbank exchange rate when converting one currency to another. This markup represents the profit margin or service fee for facilitating the currency exchange.

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For example, if the interbank rate for USD/EUR is 1.1000 but your broker quotes you 1.1020, the 0.0020 (or 20 pips) difference is the FX markup. This markup can be expressed as a percentage or as a fixed amount, and it varies by provider, transaction type, and market conditions.

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Understanding FX markup is crucial because it directly impacts the total cost of currency conversion-higher markups mean you receive less favorable rates and pay more for the transaction.

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