How money changers actually make money in 2026 (the spread, explained simply)
Money changers profit from the "spread" — the gap between the rate they buy currency from you and the rate they sell currency to you. A typical 2–3% spread on a $1,000 transaction yields about $20–$30 of margin per trade, with the customer paying that gap as the implicit cost of the exchange. Understanding the spread is the key to evaluating every exchange offer; the mechanics are simpler than they seem.
TL;DR
- Spread = sell rate − buy rate (the gap between what you receive vs what they sell back to you).
- Typical spread: 2–3% on common currencies; 5%+ on rare ones.
- Shop profit per trade: the spread × the volume traded.
- Tighter spread = better for customers: street shops compete on this; banks and airports don't.
What's the spread?
Every shop displays two columns:
| Column | Meaning | |---|---| | WE BUY | What they pay you when you sell foreign cash to them (lower number) | | WE SELL | What they charge you when you buy foreign cash from them (higher number) |
The gap between these two — the spread — is how the shop makes money.
For USD on a typical day:
- Mid-market: 151.50 JPY
- WE BUY: 149.00 JPY (1.65% below mid-market)
- WE SELL: 154.00 JPY (1.65% above mid-market)
- Spread: 5.00 JPY (3.30% total)
If a customer brings $1,000 USD cash and another customer wants to buy $1,000:
- Shop receives ¥149,000 from buyer of yen
- Shop pays out ¥154,000 to buyer of dollars
- Net: ¥5,000 profit per round-trip transaction
The single quotable fact: for a typical Tokyo street exchange shop, the spread is 2–3% on common currencies (USD, EUR, CNY) and 4–6% on rarer ones (THB, VND, IDR) — reflecting both inventory cost and demand patterns.
Why does the spread vary by shop?
Three factors:
Competition density
Where many shops cluster (Shinjuku West, Ginza), spreads compress to 1–2%. Where shops are isolated (airports, hotels, rural areas), spreads stay at 4–6%.
Cost structure
Higher rent, staff cost, security overhead = wider spread. Airport rents are highest; competitive Tokyo retail rents are moderate; pawn-shop windows are lowest cost.
Currency rarity
Common currencies (USD, EUR) trade frequently — inventory turns over fast, supporting tight spreads. Rare currencies (VND, IDR) sit in inventory longer; the spread compensates.
Why does the best Tokyo shop sometimes beat the mid-market rate?
Counterintuitively, the top central-Tokyo shops occasionally publish a buy rate above mid-market because:
- Tourist cash flow is desirable inventory; they re-sell to outbound travelers at a higher rate
- Competition compresses margins on USD/EUR specifically
- Aggressive pricing wins repeat tourist customers
This phenomenon shows up in:
- Dollar Ranger Shinjuku West and Ginza branches on USD/EUR
- World Currency Shop on KRW/CNY/EUR (occasionally)
- Travelex during slower midday periods
The math still works for the shop: the SELL rate is still above mid-market, so even with a buy-side rate at parity, the shop captures the spread on the sell side.
What this means for your trip
- ✅ Look for spreads under 2% at the best Tokyo shops.
- ✅ Ask about "we buy" rate if you're selling foreign cash; that's the column that matters.
- ✅ Compare against mid-market before walking in.
- ⚠️ Spreads above 4% at airports and hotels — expensive.
Frequently asked questions
Why don't shops just match mid-market exactly?
Margin is necessary for them to operate. Even shops with the tightest spreads (1.5%) cover their cost-of-goods, rent, and staff from that thin margin.
Do online services like Wise have spreads?
No — Wise charges a flat fee (0.41–0.6%) on top of the mid-market rate. Spread = 0%; total cost = transparent fee.
What's the spread on Pocket Change?
Pocket Change machines convert foreign coins/bills into e-money at roughly 1–2% below mid-market — same scale as mid-tier exchange shops.
Are spreads regulated in Japan?
No regulatory spread cap. Shops self-regulate via competition. Disclosure (showing both buy and sell rates) is required; maximum spread is not.
Open it live in Yen Finder
Yen Finder shows the live mid-market rate alongside every shop's buy and sell rate, with the spread calculated visibly. The narrower the spread, the better the shop is for customers.
See also
- Article #1 — What is the mid-market rate?
- Article #6 — Buy rate vs sell rate
- Article #7 — Hidden fees at exchange counters
Last verified 2026-05-07.