Let's say I exchange 10 USD to EUR. For example 1 USD = 0.78 EUR. So, exchange rate is 0.78. In this case: 10 USD = 7.8 EUR.
I also take a fixed service fee, e.g. 0.5 EUR. Fee is the same for any exchange amount. So final amount is: 7.8 EUR - 0.5 EUR = 7.3 EUR.
Can I integrate fixed service fee in exchange rate? I can't simply subtract fee from exchange rate as I'll lose precision.
No, you can't because the fee is a fixed amount. If you exchange $20$ USD you would get $15.6$ EUR before the fee, and $15.1$ EUR after the fee. You are exchanging twice the dollars but getting more than twice the euros because the fee has less impact at the amount goes up.
If you try to incorporate the fee into the rate, the rate on $10$ USD is $0.73$ while on $20$ USD it is $0.755$