Mid-Market Rate – Simple Explained, Uses and Saving Money

About Author: Hi, I’m Quinn Askeland. In 2014, I started Transumo after experiencing expensive, slow, and frustrating international money transfers and payments through banks. Once I discovered how to manage my own international currencies much better, I became driven to help others improve their transfers and payments. Fortunately, today, there are many excellent options. See My Full Bio.

Exchange Rate from Wise

If you’ve ever tried to exchange currency you may have come across the term “mid market rate” or “interbank rate”.

What is the mid-market rate or interbank rate?

The mid-market exchange rate is the rate banks and big financial institutions use when swapping currencies from one to another.

The mid-market rate depends on a lot of factors and can have an impact both regular people (like investors, travelers, expats, immigrants, freelancers) and global businesses especially exporters and importers.

In this article, we will explain it all simply but also show you how you the individual saving money through the mid-market rate!

Disclosure: This post may contain offers and affiliate links to save you money and it also helps us to keep providing the best information. For more information, see our disclosures here.

1. How mid-market exchange rates work

Mid-market or interbank exchange rates can be thought of as the price of purchasing one currency for another. These rates enable you to know how much your currency is worth in another currency.

For example, at the time of writing this article 

1 USD = 0.82 GBP 

You can get the most updated mid-market exchange rate by typing in your currency pairs on Google or a website like Reuters.

Alternately if you want a free website that offers a lot of data points but remains user friendly – check out Tradingview and simply type in the pair you want at the top of the page.

The mid-market exchange rate is calculated by arriving at the middle-point of the buy and sell rates of a specific currency pair. 

For example, let’s say the buying rate for 1 USD is 0.80 GBP and the selling rate for 1 USD is 0.90 GBP. 

The mid-market rate would be the average of these two rates, which is 0.85 GBP.

In simple terms, mid-market rate is the fairest exchange rate for a currency pair. This is why the mid-market rate is also called the “mid-market” rate, “the spot rate,” or the “real exchange rate.”

These rates are set by global tier 1 banks such as Citibank, JP Morgan, HSBC, Barclays, etc and they fluctuate through the day due to a number of reasons (see below – “What causes mid-market rates to fluctuate”).

2. Why knowing the mid-market exchange rate is important

When traveling abroad or sending money to a different country or buying something in a different currency, it’s important to consider the mid-market exchange rate as it represents the true value of the currency exchange.

However, banks and money transfer services will charge a markup on top of this rate.

OFX Transaction Screen

To avoid overpaying, it’s recommended to quickly check the mid-market exchange rate for your specific currency pair and compare it with the service you are considering.

In Practice

Money transfer companies display a “live” exchange rate on their website – this is often the mid-market rate.

However these rates usually do not include the service fees they charge to transfer your money. 

So when you go to transact you will find that the exchange rate is different to the mid-market or exchange rate.

Currency exchange kiosks on the other hand show you the rate they will Buy and Sell a currency. The difference is how they make money.

3. How to get a competitive exchange rates

Generally speaking if you need to get cash or send cash – things get expensive.

If possible, try to use bank accounts and try not to use the banks themselves because they are expensive as well.

Fortunately there are a few ways that money transfer companies can offer low exchange rates (while also making money from your transfers):

No markup on mid-market rate: Wise or TransferWise (review) is one of the few money transfer services that offers international transfers at the mid-market rate – then charges a small transparent amount (0.61% on average) as a transaction fee. 

Online money transfer companies: have lower overhead costs than traditional brick-and-mortar companies and can therefore offer better exchange rates.

For example, WorldRemit (review) is an online-only service and can offer inexpensive cash transfers compared to a traditional remitter like Western Union (review) or Ria (review) who have many physical kiosks and thus a higher cost of operation.

Larger amounts: or frequent amounts: As the amounts increase it becomes easier for money transfer services to offers better exchange rates.

For example OFX (review) offers a better exchange rate as the amount increases.

4. What causes mid-market rates to fluctuate

Mid-market exchange rates fluctuate for a variety of reasons. Some of the main factors include:

Supply and demand

Like any other market, the foreign exchange market is driven by the forces of supply and demand. When demand for a currency is high, its value will increase, and when demand is low, its value will decrease.

Political and economic stability

 A country’s political and economic stability can also have an impact on its currency’s value. If a country is perceived as politically or economically unstable, it can lead to a decrease in demand for its currency and a depreciation in its value.


Inflation also plays a role in determining exchange rates. When a country has high inflation, it will often increase the interest rate and make that currency more attractive relative to others.


Speculation in the foreign exchange market can also cause exchange rates to fluctuate. When investors speculate that a currency will appreciate in value, they will buy that currency, increasing demand and pushing up its value. 

Conversely, when investors speculate that a currency will depreciate in value, they will sell that currency, decreasing demand and pushing down its value.


1. What is the difference between bid price and ask price in currency conversion and international transfers?

In currency conversion or international transfers, the “bid price” is the rate which a person or financial insitution buys a currency and the “ask price” is the rate at which they will sell the currency. 

The bid price is slightly higher than the ask price, which allows the facilitator of these currency exchanges to make a profit. 

To give you a simple example: 

Say you’re traveling abroad to the UK and plan to exchange some currency (USD to GBP) from a provider like Thomas Cook. 

When you’re buying, Thomas Cook will give you a higher bid rate of 1 USD = 0.85 GBP and if you want to sell some remaining currency back to them after your trip, they will give you a lower ask rate (for example 1 USD = 0.80 GBP) to make money off the exchange. 

The difference isn’t much when you’re dealing with small amounts, but it can add up if the amount is higher. 

2. What is currency conversion spread?

When you’re buying or selling currency, you may be offered an exchange rate that is different from the mid-market rate. 

This difference is called the currency conversion spread (also called the bid-ask spread!), and it represents the cost of doing business with the bank or currency exchange provider. 

This spread can vary widely depending on the provider and the amount you are converting, so it is important to shop around and compare rates before making a transfer.

3. Can I get the mid-market rate as a business owner or frequent traveler?

Unfortunately that’s really rare – the mid-market rate is only reserved for banks, large financial insitutions and other partners. 

However, you can get close if you’re using a service like Wise to transfer money or the Wise multi currency account (review) to hold, manage, and convert between multiple currencies. 

4. How do hidden fees increase the exchange rate?

A money transfer company may buy currencies at the mid-market rate, but they will rarely offer it to you. 

Usually, they add in their own fees – a margin on the mid-market rate to make money from your transfer – which increases the exchange rate you get.

Bottom line

Our goal is to make it easy for you to make international money transfers (cheap, fast and safe) and the mid-market rate is important.

For example, the Wise exchange rate is the mid-market or mid-market rate.

Taking the time to understand how the mid-market exchange rates work to ensure you get a good rate could be the best two minutes you spent today. At Transumo, you will find we talk about interbank rates a lot and also how long they guarantee they offer (while you are moving your funds).

Now you can follow what we are talking about, and make sure you are using the right service for your needs and getting a great rate too.

Happy Transfers and FOREX!

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