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What is the mid-market rate?

Also known as the inter-bank rate, this rate is the best you'll get for your money transfer.

The mid-market rate is one of the most important things to pay attention to when sending money transfers. A lot of companies try and hide their rates, or they make up a clever name for the rate they are offering because it isn’t the mid-market rate.

What exactly is the mid-market rate?

Also known as the middle market rate or the inter-bank rate, the mid-market rate is the middle point between two currencies where the buy and sell prices meet. It is the highest price someone is willing to buy a currency for, while simultaneously being the lowest price someone is willing to sell it to them at.

Who uses the mid-market rate?

The most common use for the mid-market rate is to decide what a fair, market decided price is for a commodity — whether that is a foreign currency, a stock, a cryptocurrency or something else being bought and sold. In foreign exchange markets, the market rate is the rate financial institutions and foreign exchange brokers use to trade large transactions. This rate is fluid and changes every couple of seconds as currencies are traded on the global foreign exchange market.

The average person encounters this rate when they are sending money to a foreign country or exchanging their native currency at an exchange for foreign money. This number is also often quoted in the news as a measure of how a country’s currency is performing against their neighbor or the global market in general.

Whenever you see currency pairs, such as USD-MXN, they are almost always based on the mid-market rate. Unfortunately, though, some companies add a spread onto the mid-market rate to make a profit.

Will I get the mid-market rate for my money transfer?

Not always. Most of the largest money transfer companies, like Western Union and MoneyGram, always add a spread onto transfers. Some smaller companies, like Wise, offer the mid-market rate for transfers but may charge a fee instead.

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Send money internationally with Wise

Wise uses the mid-market rate and transparent fees to help you send money in 45+ currencies.

  • Fair service fees and mid-market rates – a major market differentiator
  • Next-day delivery for most currencies
  • Easy-to-use app

What is a spread and how do I avoid it?

Market spreads are added on to the mid-market rate by banks and most money transfer companies to make a profit when they exchange money for you. This spread can be as little as a hundredth of a percent or as much as 10% or greater, which can quickly get expensive for the sender. Imagine you are sending $1,000 to Mexico to help a friend in a tough time, here is how different spreads would affect your transfer.

Crunching the numbers: Sending $1,000 to Mexico

Let’s say you need to send $1,000 to family in Mexico. Here’s what you might face as far as fees and exchange rates as of March 24, 2020.

Cash transferDigital money transfer serviceBank transfer
Fee$3.99$10$25 + additional correspondent bank fees
Exchange rate1 USD = 24.709 MXN1 USD = 24.833 MXN1 USD = 23.380 MXN
Transfer speedWithin an hour1-2 days2-5 days
Amount receivedMXN 24,611MXN 24,585MXN 22,796
  • Fastest and best value
  • Better than the bank
  • Slowest and most expensive

Given the bank’s weak exchange rate, which is more than 5% worse, it should be no surprise it is the worst of the three options. Going with one of the other two options not only secures you a better exchange rate that is closer to the mid-market rate, but also makes sure that more pesos get to your recipient.

How exchange rates work

Bottom line

Finding the balance between the spread added on top of the mid-market rate and the fees charged to send your transfer can be tricky, but not impossible. To see a full list of options broken down into an easy-to-digest table, visit our international money transfers page. We’ve done the work for you to make it easy to figure out how fees and spreads come together to get you the best deal.

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