- Short Answer
- What Is the Real Exchange Rate (Mid-Market Rate)?
- How Japanese Banks Make Money From Exchange Rates
- Why Japanese Banks Don’t Show the Real Exchange Rate
- Why This Matters for Foreign Residents
- Bank Exchange Rate vs Real Exchange Rate
- How Much Money Do You Lose From Bank Exchange Rates?
- Why Overseas Transfers Cost More Than the Listed Fee
- A More Transparent Alternative to Bank Transfers
- When Bank Transfers Are Still Appropriate
- How Residents in Japan Reduce FX Losses
- Why the Bank Rate Is Worse Than Google
- Final Thoughts
Short Answer
Japanese banks do not show the real exchange rate because the currency conversion margin is part of how international transfers are priced.
Instead of charging a large visible service fee, banks include their profit inside the exchange rate they offer customers.
The rate you see on Google is the mid-market rate used between financial institutions, while the bank provides a customer rate that already includes this margin.
Many foreign residents in Japan notice something confusing when sending money overseas.
The exchange rate shown by Japanese banks is often worse than the rate they see on Google, XE, or financial news websites. Even when the bank transfer fee looks reasonable, the total amount received abroad is lower than expected.
This is not a mistake, and it is not random.
Japanese banks intentionally apply their own exchange rate, which includes a built-in currency conversion margin.
In practice, most customers lose far more from the exchange rate than from the bank’s listed transfer fee.
The fee you see is usually not the main cost — the exchange rate is.
Japanese banks usually do not use the real mid-market exchange rate for customer transfers.
This article explains:
- What the “real exchange rate” actually is
- Why Japanese banks use different rates
- How this affects international transfers
- How residents can avoid unnecessary losses
This difference is commonly called an FX margin or exchange-rate markup in international banking.
For a full explanation of how overseas transfers work structurally in Japan, see:
Wise International Transfers in Japan: A Complete Guide for Residents
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What Is the Real Exchange Rate (Mid-Market Rate)?
In financial terms, this rate is also called the interbank rate because it is the price used between banks in wholesale currency markets.
The real exchange rate is called the mid-market rate.
It is the rate at which banks and financial institutions trade currencies with each other on global markets.
This is the rate you see on:
- Google currency converter
- XE.com
- Reuters or Bloomberg financial data
Example:
If Google shows:
1 USD = 150 JPY
That is the mid-market exchange rate.
However, when sending money through a bank, you may receive:
1 USD = 145 JPY
The difference is not a calculation error.
It is intentional pricing.
How Japanese Banks Make Money From Exchange Rates
Japanese banks typically add a margin to the exchange rate.
This is called an FX spread or foreign exchange margin.
Instead of charging a visible fee, the bank earns revenue by adjusting the exchange rate.
The difference may look small, but the financial impact becomes large as the transfer amount increases.
The impact becomes clearer when you see the numbers:
For example:
| Transfer Amount | Market Rate | Bank Rate | Loss |
|---|---|---|---|
| ¥500,000 | 150 JPY/USD | 145 JPY/USD | ≈ ¥16,600 loss |
| ¥1,000,000 | 150 JPY/USD | 145 JPY/USD | ≈ ¥33,300 loss |
This cost is usually larger than the transfer fee itself.
Because it is hidden inside the rate, many customers never notice it.
Why Japanese Banks Don’t Show the Real Exchange Rate
1. Pricing Structure
International transfers are priced as a bundled service.
Instead of itemizing currency conversion separately, banks include profit inside the rate.
2. Predictability for Banks
Currency markets move constantly.
Banks protect themselves from volatility by setting their own internal rate instead of using the real-time market rate.
3. Legacy Banking Systems
Japanese banks rely on traditional international transfer systems (SWIFT correspondent banking).
These systems were designed decades ago when transparency was not expected by consumers.
4. Customer Expectations
Domestic banking in Japan is stable and low-fee.
Historically, most customers did not compare international FX pricing, so transparency was not prioritized.
Why This Matters for Foreign Residents
For people who send money internationally, the exchange rate matters more than the transfer fee.
This affects:
- Monthly remittances
- Tuition payments
- Supporting family abroad
- Receiving overseas income
- Saving money for relocation
Over time, FX margins quietly reduce savings by hundreds of thousands of yen.
This is especially important for residents who regularly send remittances abroad from Japan.
Bank Exchange Rate vs Real Exchange Rate
The bank exchange rate is a customer price, not a market price.
The real exchange rate (mid-market rate) is the rate banks trade currencies between themselves.
The difference between these two rates is called the FX margin.
This margin is how banks earn revenue from international currency conversion.
How Much Money Do You Lose From Bank Exchange Rates?
Even a 2–4% exchange rate margin can significantly increase the real cost of a transfer.
For regular monthly remittances, this often becomes the largest financial loss in international banking.
Many residents believe the bank transfer fee is the main cost.
In reality, the exchange rate margin is usually the largest cost in international transfers from Japan.
Why Overseas Transfers Cost More Than the Listed Fee
Many residents focus on the visible fee:
“Transfer fee: ¥4,000”
But the real cost is:
Transfer fee + FX margin + intermediary deductions.
The exchange-rate difference is usually the largest part.
For a breakdown of all hidden transfer costs, read:
Hidden Bank Fees for Overseas Transfers in Japan
A More Transparent Alternative to Bank Transfers
Some international transfer platforms use a different model.
The key difference is transparency: you see the real exchange rate and the exact fee before confirming the transfer.
Instead of sending money across borders through SWIFT, they match local transfers inside each country.
Because the currency conversion is separated from the bank transfer, the provider can use rates much closer to the mid-market rate.
This allows users to know the exact received amount in advance.
When Bank Transfers Are Still Appropriate
Japanese bank transfers may still be appropriate for:
- Corporate payments
- Real estate transactions
- Certain legal documentation requirements
- Very large regulated transfers
For regular personal transfers, however, the exchange-rate margin usually becomes the dominant cost.
How Residents in Japan Reduce FX Losses
Practical approaches include:
- Compare exchange rates, not just fees
- Avoid emergency conversions
- Separate domestic banking and international transfers
- Confirm the final received amount before sending
Small improvements in exchange timing and transparency can significantly improve long-term financial stability.
Over time, repeated monthly transfers can significantly increase total transfer costs due to exchange-rate margins.
Why the Bank Rate Is Worse Than Google
The exchange rate you see on Google is the mid-market rate — the price banks trade currencies between themselves.
The rate you see at a bank is a customer rate, which includes a built-in margin.
In other words, the bank is not giving a worse rate by mistake.
The rate difference is the bank’s pricing for providing the international transfer service.
This pricing structure is standard across many traditional international banking systems and is not unique to a specific bank in Japan.
Final Thoughts
Japanese banks are highly reliable for domestic use.
However, international transfers operate under a different pricing structure.
Banks do not show the real exchange rate because currency conversion is part of how international banking services are priced.
For foreign residents living in Japan, understanding FX margins is essential.
Once you recognize that the exchange rate — not the transfer fee — is the main cost, international money management becomes far more predictable.
Understanding how exchange rates work is the first step to avoiding hidden bank fees when sending money from Japan.
