Historically currency exchange was something performed by banks. Assuming we're talking about travellers, not corporations exchanging millions of one currency for another, this was a part of the game when travelling abroad before credit cards. I well remember either having to go to the bank to get travellers cheques or actual foreign currency or exchanging currency upon arrival in some other country. Many people still do this today of course (usually those who still live in the 20th century).

But today so many of these transactions are either done via ATM's in the country of arrival or via credit card transactions for pujrchases. Now foreign currency fees were based on the idea that banks had to stock the various currencies and physically make provisions to move banknotes in the various currencies. But today, for example a credit card charge, the exchange is electronic in nature. Visa (or MC or Amex) handles millions of these exchanges daily and they are all done on paper not based on actual currency. Same goes for ATM transactions. The ATM dispenses local currency. The actual amount charged to the consumer is electronically determined by whatever the exchange rate is at the moment the transaction hits the network. If I pull £20 from an ATM in London, when the transaction hits the network it is converted electronically to the USD equivalent. No physical exchange of currency tgakes place.

So the excuse that foreign currency and foreign transaction fees are needed to cover the costs of stocking the various currencies is unadulterated nonsense.