Mid-Market Rate
Quick Answer
The mid-market rate is the midpoint between the buy and sell prices of two currencies in the global foreign exchange market, often called the 'real' or 'true' exchange rate.
Definition
The mid-market rate is the midpoint between the buy and sell prices of two currencies in the global foreign exchange market, often called the 'real' or 'true' exchange rate.
Explanation
The mid-market rate is calculated as the average of the bid (buy) and ask (sell) rates in the interbank forex market. This is the rate you see on financial data sites like Google Finance, XE, or Bloomberg. It is the pure rate without any markups or fees added by banks or transfer services.
Money transfer providers rarely offer the mid-market rate to consumers. They add a margin (typically 0.5% to 3%) to generate revenue. A provider advertising 'no fees' is usually making money through the spread between the mid-market rate and the rate they offer you. The total cost of a transfer is the combination of explicit fees and the exchange rate markup.
When comparing money transfer services, look at the total cost — not just the headline fee. Wise is known for offering rates closest to the mid-market rate, while traditional banks often have the largest markups.
Example
If the mid-market rate for USD to EUR is 0.92, but your bank offers 0.90, the 2-cent difference is the bank's markup. On a $10,000 transfer, this costs you €200 compared to the mid-market rate.