Why can’t I get the mid-market rate for my international money transfer?

The mid-market rate isn't typically available to the general consumer. Find out why, and how you can get as close to it as possible.

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It may not come as a surprise, but the foreign exchange rate you hear quoted on the evening news or the rate you see when you do a Google search isn’t the rate you’ll get when you send money overseas. This is the mid-market rate, sometimes called the interbank rate. Banks and money transfer companies use this rate when they do business amongst themselves. Your every day customer usually gets the mid-market market rate plus a margin. Even if the international money transfer company doesn’t charge a fee, there’s a profit built into the exchange rate.

The internet has connected people from all over the world. While this has allowed businesses such as peer-to-peer (P2P) transfer services to access better rates than ever before, even they need to make a profit. As a general consumer, you probably won’t get the real market rate on your overseas money transfer. But P2P services such as TransferWise and CurrencyFair are undercutting banks and traditional money transfer companies and bringing you as close as ever to the mid-market foreign exchange rate. In return they see larger volumes of customers, bolstering their own profits.

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What is the mid-market rate?

The mid-market rate is the rate financial institutions and foreign exchange brokers use to trade large transactions. It’s a midway point between foreign currency buy and sell rates. This rate is fluid and changes every couple of seconds as currencies are traded on the global foreign exchange market.

What are P2P international money transfers?

P2P foreign exchange services cut out the middleman and connect people on different sides of the world looking to buy and sell different currencies. Some P2P services give you the mid-market rate plus a small commission, which often ends up being more competitive than international money transfer services on offer from banks and traditional companies such as Western Union or MoneyGram.

Who are the P2P international money transfer companies?

Have a look at these P2P international money transfer companies operating in the United Kingdom.

  • TransferWise

TransferWise offers the mid-market exchange rate to customers when sending money overseas. The mid-market rate is the halfway point between the buy and sell prices listed on global currency markets — in other words, it offers a more competitive rate compared to other providers on the market.

  • CurrencyFair

CurrencyFair adds a small fee and margin to each transfer, which is usually still much smaller than what other banks and exchange brokers might charge.

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What to look out for when comparing international money transfer companies

Consider the following when you’re comparing international money transfer companies.

  • Fees. The commission: charged on a per-transfer basis. Disbursement fee: charged by the receiving bank (not all the time).
  • Indicative rates and currency conversion calculators. When you compare quotes using the online currency converter tool on different websites, more often than not, the mid-market rate is quoted. This is used for example purposes, and chances are this is not the rate you’ll get when you request and accept a quote from an international money transfer provider.
  • 0% commission. Some providers advertise that they don’t charge a transfer fee on your international money transfer. While you don’t pay an additional fee (a commission) for the transfer service, a margin is applied to the foreign exchange rate to compensate for this. Make sure you compare quotes from providers that do and don’t charge a transfer fee as well as P2P providers so you can find out whether it’s better to pay a fee in order to get a better foreign exchange rate.
  • Payment method. If you pay using your credit card or debit card instead of paying using a bank transfer, you may pay more for your transfer.

Everyday consumers usually can’t access the mid-market rate; however, P2P transfer companies and international money transfer services can offer you a competitive deal. Services offered by TransferWise, CurrencyFair and even HiFX, TorFX and OFX usually offer lower fees and better exchange rates than banks.


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