Finder is committed to editorial independence. While we receive compensation when you click links to partners, they do not influence our content.

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.

Updated

Fact checked

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 TransferWise, offer the mid-market rate for transfers but may charge a fee instead.Back to top

Send money internationally with TransferWise

Enjoy high maximum transfers into more than 20 currencies while saving up to 90% over local banks.

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

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 transfer Digital money transfer service Bank transfer
Fee $3.99 $10 $25 + additional correspondent bank fees
Exchange rate 1 USD = 24.709 MXN 1 USD = 24.833 MXN 1 USD = 23.380 MXN
Transfer speed Within an hour 1-2 days 2-5 days
Amount received MXN 24,611 MXN 24,585 MXN 22,796
Verdict
  • 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.

More guides on Finder

Ask an Expert

You are about to post a question on finder.com:

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder.com provides guides and information on a range of products and services. Because our content is not financial advice, we suggest talking with a professional before you make any decision.

By submitting your comment or question, you agree to our Privacy and Cookies Policy and finder.com Terms of Use.

Questions and responses on finder.com are not provided, paid for or otherwise endorsed by any bank or brand. These banks and brands are not responsible for ensuring that comments are answered or accurate.
Go to site