The cost of spending money abroad is assembled from several charges applied at different points. Each is small on its own, and they are rarely presented together.
The network rate is the starting point
Card networks publish a daily rate used to convert a foreign transaction into the cardholder's currency, and it sits close to the wholesale interbank rate.
This rate is generally the best a consumer will see, and everything else in the chain is added on top of it.
Because it is set once a day, a transaction can settle at a slightly different rate than the one visible when the card was tapped.
The issuer adds its own margin
Many card issuers apply a foreign transaction fee, charged as a percentage of the converted amount and shown as a separate line or folded into the total.
Some cards and accounts waive it entirely, which is the single largest difference between two otherwise similar products for a traveller.
Cash withdrawal abroad frequently carries an additional fee structure separate from the purchase fee, sometimes with a minimum charge that penalises small withdrawals.
Merchants can insert a conversion of their own
When a terminal or website offers to charge in the cardholder's home currency, the merchant's payment provider performs the conversion instead of the network.
That provider sets its own rate and keeps the margin, which is normally worse than the network rate the card would otherwise have used.
The offer is presented as a convenience and the choice belongs to the cardholder, so declining it and paying in the local currency is always available.
ATMs charge on both sides
A machine abroad may levy an operator fee independently of anything the issuing bank charges, disclosed on screen before the withdrawal completes.
The same home-currency conversion offer usually appears at the ATM, with the same answer: decline it and let the network convert.
Bank-operated machines inside branches tend to carry lower operator fees than independent machines placed in tourist areas.
Where the layers actually add up
On a two-week trip the combined effect across accommodation, meals and transport is meaningful, and it is entirely avoidable with the right card.
Prepaid travel cards convert at load time, which fixes the rate but introduces a spread at loading and often charges to unload leftover balance.
Carrying a small amount of local cash for places that do not take cards, and paying in local currency everywhere else, keeps the layers to a minimum.