How money changers actually make money in 2026 (the spread, explained simply)
⚡ 30-Second Answer: Money changers earn from ①the spread between bid/ask (2-8% margin) — their main income, ②flat fees of ¥500-1,500 per transaction, and ③FX inventory hedge gains. "No fee" booths hide 5-8% spreads — you end up -7-10% worse off. Wise/Revolut operates at mid +0.5%, less than half the cost of physical changers.
Quick Reference
Value
Bank exchange spread
2-3%
Kiosk spread
5-8% (worst)
Flat fee
¥500-1,500
"No fee" booths
Hidden in spread
Wise/Revolut
mid + 0.5% (industry low)
Last verified
June 2026
📖4 min read
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Contents📖 ~4 min read
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 (illustrative — check the live rate, only
World Currency Shop is live-tracked here):
WE BUY: roughly 1.5–2% below the mid-market rate
WE SELL: roughly 1.5–2% above the mid-market rate
Spread: roughly 3–4% total
So if one customer brings $1,000 USD cash to sell and another
customer buys $1,000, the shop pockets the difference between the
two rates — a few percent of the amount — as profit on the
round-trip. Rates are indicative and move daily, so always check
the live board before walking in.
The number to remember: 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 get so close to the mid-market rate?
The top central-Tokyo shops publish a buy rate just slightly
below mid-market — never above it, because the shop always
keeps the spread — but the gap can be remarkably thin:
Tourist cash flow is desirable inventory; they re-sell to
outbound travelers, so they can afford a thin buy-side margin
Competition compresses margins on USD/EUR specifically
Aggressive pricing wins repeat tourist customers
This shows up at downtown specialist counters — Dollar Ranger,
World Currency Shop, Daikoku and other independents — where the
USD buy rate typically lands somewhere around mid −1% to −2.5%,
varying by shop and day. (World Currency Shop, the one operator we
live-track, currently sits near mid −2%.) The exact figure moves
daily, so treat any single number you see quoted as indicative and
check the live rate.
The math still works for the shop: the buy rate sits a
fraction below mid-market and the SELL rate sits above it, so
the shop captures the spread on both sides.
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.
See live rates before you exchange
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.