A closer look at Mastercard and Wise’s exchange rates in Canada

Paying in a foreign currency with your Canadian credit card usually costs more than it seems. Most credit cards, including those on the Mastercard network, add hidden fees and use marked-up exchange rates. Knowing how these rates work can make a big difference, especially if you shop, travel, or send money internationally. In this article, we’ll break down Mastercard’s exchange rate structure, compare it to Wise’s mid-market rate, and show how a transparent alternative can help you keep more of your money.

How Mastercard exchange rate works in Canada

When you pay in a foreign currency with a Canadian-issued Mastercard, the transaction gets converted into Canadian dollars using Mastercard's currency conversion rate. This rate is set by Mastercard and typically includes a small markup over the mid-market exchange rate.

In addition to the exchange rate itself, most Canadian banks add a foreign transaction fee (commonly around 2.5%) on top of the converted amount. This fee varies by card issuer and appears separately on your statement.

Example: Using a RBC Cash Back Mastercard in the US

Let's say you use a RBC Mastercard to make a 100 USD purchase in the US. Here’s how the conversion would work:

1. Mastercard applies its daily USD to CAD exchange rate (for example 1 USD = 1.37 CAD - see the Mastercard Currency Converter for current rates).
2. The 100 USD gets converted to 137.00 CAD using that rate.
3. RBC adds a 2.5% foreign transaction fee: 137.00 CAD × 0.025 = 3.43 CAD
4. Your final charge: 140.43 CAD

How Wise calculates exchange rates

Wise offers a more transparent approach to currency conversion. Unlike banks and credit card providers, Wise uses the mid-market exchange rate – the rate you often see on Google – without any markup.

In addition to the exchange rate, Wise charges a low, upfront conversion fee for each transaction, which varies depending on the currencies involved and the chosen payment method.

Mastercard exchange rate vs Wise – Side-by-side comparison

When converting currencies, the exchange rate and associated fees can significantly impact the amount you receive. While Mastercard offers currency conversion services, they often include hidden fees and less favourable exchange rates. Wise, on the other hand, provides a transparent and cost-effective alternative.

FX rate comparison

* if applicable

** As of 13th July 2027 at 15.35

Where fees come in

When you spend in a foreign currency, the true cost isn’t just about the exchange rate, but the layers of fees added on top.

Mastercard uses its own network exchange rate, which is usually close to the mid-market rate, but includes a margin or markup. On top of that, most Canadian issuers add a foreign transaction fee, often around 2.5%¹. Some may apply additional charges depending on the card.

Wise uses the mid-market rate and charges a transparent upfront fee, with currency conversion starting from 0.48%². You'll always view the fee and final converted amount before you confirm the transfer or payment.

Real-world examples of the mastercard exchange rate vs wise

The Wise card uses mid-market exchange rates with upfront, transparent fees, making it ideal for spending and ATM withdrawals abroad. Mastercard, in contrast, applies its own exchange rate and Canadian issuers typically add a 2.5% foreign transaction fee, often without upfront visibility. Let's take a look at a few more examples:

Example – Online US purchase

Let’s say you're buying an item priced in USD - perhaps a tech gadget on a US website priced at 500 USD.

With Mastercard:

• Mastercard applies its network’s USD-CAD exchange rate (e.g. 1 USD = 1.3143 CAD)
• Your Canadian card issuer adds a 2.5% foreign transaction fee as per RBC’s Mastercard terms
• Result: (500 × 1.3143) + 2.5% =  1,320.68 CAD

With Wise:

• Wise converts at the mid-market rate (no hidden markup)
• A transparent fee is applied based on region/currency, displayed upfront
• If you already hold USD in your Wise balance, no conversion fee applies. Otherwise, Wise converts at mid-market and charges a known fee that’s clearly shown during checkout
• Result: You pay exactly the USD amount (500 USD in mid-market rate CAD) plus a clear Wise fee that usually saves you more compared to hidden margins + an offshore transaction fee.

Example – ATM withdrawal in Europe

Imagine withdrawing the equivalent of 350 CAD per month from an ATM in Europe using your Wise card:

Wise²:

• You have two free withdrawals per month up to  350 CAD total per month, per account.
• If you make more withdrawals or exceed  350 CAD, a flat fee of  1.50 CAD per withdrawal and a 1.75% variable fee applies on the excess amount.
• ATM operator surcharges (charged by the ATM owner) may apply but are separate.

Mastercard (through your Canadian bank):

• ATM access fees typically range around 3.5 – 5 CAD per withdrawal¹, plus foreign exchange fees and the 2.5% FX transaction fee.
• No free withdrawal allowance shown; you’re usually charged for each withdrawal and FX conversion.

Factors affecting actual rate received

Several variables can impact the final exchange rate you receive when converting currency with a card, and not all are immediately visible at checkout. Understanding how these factors work can help you avoid unexpected costs.

Timing

Mastercard usually applies the exchange rate on the settlement date, not the purchase date. However, the actual rate applied can depend on when the merchant processes your transaction and how quickly their bank settles it with Mastercard.

Therefore, the actual rate used may differ depending on how long it takes for the merchant to process the transaction. If exchange rates shift between the date of purchase and settlement, your actual cost in CAD may vary.

Issuer policies

While Mastercard sets the base rate for currency conversion, your card issuer controls any additional fees. Most Canadian banks apply a 2.5% foreign transaction fee on top of the Mastercard rate, which is added as markup to each international transaction. In some cases, issuers may also charge extra for foreign ATM withdrawals or dynamic currency conversion (DCC) if offered at the point of sale.

Even if you’re quoted a price in your home currency during an overseas purchase, DCC often results in a worse exchange rate compared to letting Mastercard handle the conversion, and it may come with further fees.

Type of transaction:

The type of purchase or withdrawal also affects the rate and fees applied:

• Point-of-sale transactions abroad are usually processed in local currency and converted using Mastercard’s rate plus any issuer markup.
• Online purchases in a foreign currency follow the same rule but may also incur merchant-specific processing delays.
• ATM withdrawals overseas can come with multiple charges: a local ATM fee, an issuer fee, and the foreign transaction markup.
• Dynamic currency conversion (DCC) at the checkout allows merchants to convert the total to CAD at their own rate, which is usually worse than Mastercard’s, and may also include hidden fees.

Conclusion

Mastercard relies on a network rate that can be impacted by card issuer markups and added fees, meaning that what you see at checkout might not reflect what actually appears on your statement.

Wise, in contrast, uses the real mid-market exchange rate and charges a small, upfront fee that’s easy to understand before you commit to making a purchase.

If you often travel, shop online in other currencies, or send money abroad, comparing the final amount received can make a noticeable difference. With full transparency and no hidden surprises, Wise offers a simple way to keep more of your money.

1. RBC® Cash Back Mastercard‡ Information Box (subject to change)
2. Wise Fees & Pricing: Only Pay for What You Use