They actually charge 3% above the wholesale rate that Visa (or MC) charges. Visa already charges a 1% markup over the excellent wholesale rates they use, and every card uses that rate as a base. So the 3% extra markup charged by Citibank is above the wholesale rate + 1% base rate.

Capital One is one of the better issuers to use for foreign transactions. They don't charge a markup over the wholesale rate + 1%.

-David