Currencies trade at two prices at once: the price buyers will pay and the price sellers will accept. The mid-market rate is exactly halfway between them. It's the rate you see on search engines and currency sites, and it's the fairest benchmark for any conversion.
Why you rarely get it
Most banks and payment apps convert your money at their own rate, set a little below the mid-market rate in your direction. The difference is their profit. It's often described as "no fee" because it never appears as a separate line.
How to measure the markup
Compare the provider's rate with the mid-market rate at the same moment: markup = 1 − provider rate ÷ mid-market rate. If the mid-market rate is 0.9200 and the provider gives 0.8970, the markup is 2.5%. On a 1,000 payment, that alone costs 23 in the receiving currency.
Route A
(1,000 × (1 − 3%) − 0) × 0.92 × (1 − 2.5%)equals870.09
Route B
(1,000 × (1 − 0.6%) − 1) × 0.92 × (1 − 0%)equals913.56
Difference
|870.09 − 913.56|equals43.47
Tips for getting closer to the real rate
- Check the mid-market rate on the day you convert, not a week later.
- Compare total cost, not just fees. A provider with a fee and no markup can be cheaper than one with no fee.
- Avoid automatic conversion by platforms if you can hold the original currency and convert later with a cheaper provider.