# Frequently Asked Questions (FAQ) - Customizable Take Rates

## **1\. What is a take rate?**
Your take rate is the margin you earn on each transaction processed through Conduit.

Example: a 0.20% (20 bps) take rate on 10,000 USD earns you 20 USD.

## **2\. What is a spread?**
A spread is a small adjustment to the FX rate that embeds your margin directly in the exchange rate instead of showing a separate fee.

## **3\. How are Conduit’s and my spreads related?**
Conduit applies a base spread (our margin), and you add an additional spread (your margin). Together, these two components form the final FX rate shown to your customer.

#### **How your revenue is calculated**
Your revenue comes from the difference between the rate Conduit gives you and the rate your customer receives:

_Your revenue = Customer Rate – Conduit Rate_

This margin is automatically converted to USDC and counted as your take-rate revenue.

#### **Why spreads ≈ take rates**
For small values (e.g., 5–30 bps), a **spread expressed in bps behaves almost exactly like a take rate in bps**, because the spread is applied directly to the transaction amount. Differences only become noticeable at larger spreads.

## **4\. Can I set a take rate instead of a spread?**
Not directly. Today, take rates are applied through **FX spreads** (in basis points), because our quoting engine adjusts the **exchange rate**, not a percentage fee.

For practical purposes, **small spreads behave almost exactly like take rates**:

- A **25 bps spread** ≈ **25 bps take rate**
- A **10 bps spread** ≈ **10 bps take rate**
- And so on.

#### **Why this equivalence works only for small values**
A spread changes the **FX rate**, which then gets multiplied by the transaction amount. When the spread is small (5–30 bps), the adjustment to the FX rate is tiny, so:

- the _effective margin_ you earn
- and the _bps you applied_

They are nearly identical.

#### **What happens with larger spreads**
Once spreads get bigger (50+ bps):

- the adjustment to the FX rate becomes more noticeable
- compounding effects show up
- rounding differences accumulate
- the “bps spread” no longer matches the “effective bps of revenue” perfectly

In other words:

- **Small spreads** > spread (bps) ≈ take rate (bps)
- **Large spreads** > spread (bps) ≠ take rate (bps), small variances appear

This is true for _all_ FX engines because the spread modifies the **rate**, not the **notional**, which creates slight non-linearities at higher values.

## **5\. Who earns what in a transaction?**
Each transaction contains two margin components:

- **Conduit’s margin** (already included in the rate you receive)
- **Your margin** (the additional spread you add for your customer)

You earn the difference between **your customer’s rate** and **the Conduit rate**.
Conduit earns the difference between **the market rate** and **the Conduit rate**.

#### **Example**
**Scenario:**
- Transaction: **100 EUR > USD**
- Market rate: **1.1600**

#### **Rate Progression**

### **How Revenue Is Calculated (Clear Formulas)**
- **Conduit Revenue** Conduit Revenue = (Market Rate – Conduit Rate) × Notional  
= (1.1600 – 1.1575) × 100 EUR = 0.25 USD

- **Your Revenue** Your Revenue = (Conduit Rate – Customer Rate) × Notional  
= (1.1575 – 1.1550) × 100 EUR = 0.25 USD

#### **Summary**
- Conduit earns the margin built between **market > Conduit rate**.
- You earn the margin between **Conduit rate > customer rate**.
- Your revenue is automatically converted to **USDC** and appears in your dashboard once the transaction settles.

## **6\. Why does the system use spreads instead of take rates?**
FX engines quote based on exchange rates, not revenue percentages. Using spreads ensures accurate pricing, fewer rounding issues, and compatibility with liquidity providers.

## **7\. Why do my manual calculations sometimes differ by a few cents?**
The Web Portal displays FX rates with **5 decimal places** for readability. Internally, the system uses the **full-precision rate** provided by our liquidity sources.

Because your manual calculation uses the **rounded** value and the system uses the **exact** value, small differences (usually a few cents) may appear.

#### **Example (USD > MXN)**
‍ **Scenario:**
- You’re converting **1,000 USD**
- Displayed customer rate (rounded to 5 decimals): **17.54321**
- Actual internal rate (full precision): **17.5432139846**

#### **Manual Calculation Using Displayed Rate**
**1,000 USD × 17.54321 = 17,543.21 MXN**

#### **System Calculation Using Full Precision Rate**
**1,000 USD × 17.5432139846 = 17,543.2139846 MXN**

**Rounded > 17,543.21 MXN or 17,543.22 MXN depending on the currency pair rules**

#### **Difference**

A difference of less than one cent appears because the displayed rate is rounded for readability, while the engine uses the exact value.

## **8\. Can I see the full precise rate?**
Yes. Use the **copy button** next to the FX rate to copy the full-precision value used in the calculation.

## **9\. How long are quotes valid?**
Quote expiration is determined by the **liquidity provider** that supplies the FX rate. Most providers use short validity windows to protect against market volatility. **Typical validity windows 175 secs.** _These windows are general guidelines. Actual validity always depends on the provider’s live pricing._

## **10\. What happens if a quote expires before the transaction is confirmed?**
If the quote expires before you click **Confirm**, the system cannot execute the transaction with that rate. When this happens:

1. **The quote becomes invalid** The rate is no longer locked.
2. **A new quote must be fetched automatically** The system will request a fresh FX rate from our provider.
3. **The final customer rate and amounts may change** If the market has moved (even slightly), the new rate may be different.
4. **You must review and approve the updated quote** To ensure pricing transparency, you must confirm the new rate before the transaction proceeds.

## **11\. When and how is the take rate applied?**
You apply the spread during each transaction. The system then uses it to calculate the final rate and your revenue.

## **12\. Can I configure take rates per customer?**
Not yet.
Current version = per transaction. Next version = predefined customer-level take rates.

## **13\. What happens if I change my spread mid-month?**
Only future transactions use the new spread. Past transactions keep their original calculated revenue.

## **14\. Why do I see revenue in USDC if my transactions are in other currencies?**
All revenue is converted and paid in USDC for simpler reconciliation and no FX exposure on your earnings.

## **15\. When does revenue appear in my dashboard?**
Revenue appears once the transaction is **successfully settled**. Pending/failed transactions do not contribute.

## **16\. Is my revenue mixed with Conduit’s?**
No. Your revenue is tracked in a dedicated ledger account, separate from Conduit’s operational balances.

## **17\. When and how do I get paid?**
In the first version of this feature:
- Payouts occur monthly
- Payments are sent in USDC in your Conduit USDC wallet.
- Transfers happen at the start of each month

## **18\. Can I withdraw revenue on demand?**
Not in the current version. Monthly payouts only.
Future updates will allow on-demand withdrawals.

## **19\. How can I see my total margin?**
Your dashboard shows:
- **Total Revenue (month-to-date)** in USDC

You can also view revenue per transaction.

## **20\. How do fees appear to my customers?**
Customers only see:
- The final FX rate
- The send amount
- The receive amount

They **do not** see your fee or breakdown. Inside the portal, you can see all components.

## **21\. Who do I contact if something looks incorrect?**
Email **support@conduit.financial** or contact your account manager. Include the transaction ID and currency pair for faster support.

#### **For more information, reach out to the Conduit support team at _support@conduitpay.com_.**