How come when I convert foreign money at the bank, it's always a much lower value than the actual exchange rate? (This is excluding the fact that banks charge a small $5 fee)

Example:
I exchanged 300 CAD and only receive back about 260-270 USD. The exchange rate is suppose to result in 297 USD

What gives?

Is there a % commission payable?

It's how they make money, they buy and sell at a slightly higher price. Take Paypal for instance (an extreme example, they are model rip-off merchants). Official rates for AUD/USD were about 0.95 but their rate was 0.92 - which is a massive difference when it comes to exchange rates. Plus exchange rates are constantly changing, so by the time you got home and checked the rates they would have been different to those offered in the banks anyway.

The fact is that banks make spread between buying and selling. So when you convert currency you can buy at the higher price "ASK" or sell at the lower price "BID". The minimum spread is only on Forex market.

Is it true that a number of banks can convert without spread. BUY price is the same as SELL price?

Yes. Banks may get you "Choice" on Forex market. BUY and SELL prices are the same in that case.

Thanks for the replies. It's good to know all banks do this. I don't feel robbed as much

I am not sure that any individual can get a choice but big investor or bank. The most part of their income is based on the comissions and spreads.