October 18, 2022

What Is the Mid-Market Rate?

Everything you need to know about the mid-market rate when exchanging currencies, including its history, purpose & how Payset can help.

What Is the Mid-Market Rate?

If you invest in or transact with foreign currencies, you’re probably looking for the best deal on any given currency. One key piece of information is the asset’s mid-market rate.

So, what is the mid-market rate?

The mid-market rate is a midpoint between the buy and sell prices of two currencies. Because buy and sell prices change over time, the mid-market rate changes along with them.

Keep reading for a full breakdown of the mid-market rate, including its common uses, how to find it, and how Payset can help.

What Is the Mid-Market Rate Used For?

The mid-market rate is used to determine an asset’s fair exchange rate.

In forex trading, banks typically use mid-market rates to negotiate trading prices. In fact, for this reason, mid-market rates are sometimes called the interbank rate.

Individual investors usually have no choice but to pay rates higher than the mid-market rate–but the mid-market rate nevertheless provides a target price you can aim toward.

You can also use currency exchange services like Payset to access mid-market rates.

How Do You Find the Mid-Market Rate?

You can calculate an asset’s mid-market rate by averaging its buy and sell prices (or its bid and ask prices).

The buy price is the highest amount that someone is willing to pay for an asset, while the sell price is the lowest amount that a seller is willing to accept for that asset. Add these numbers together, then divide the result by two to calculate the mid-market rate.

Additionally, you can use Google or a forex tracking site to look up an asset’s mid-market rate. There is often no need to calculate it yourself.

Mid-Market Rate Markups

Though you might know the mid-market rate of a currency, banks and other services will not always offer you that precise rate.

Instead, these services will often add a markup - or “spread” - and charge you a higher rate than an asset’s mid-market rate.

Services that offer no fees or zero commission are especially likely to add a markup to cover their own costs. It’s important to consider this.

Tips for Sending Money At the Mid-Market Rate

Though you probably will not be able to send money at the mid-market rate, you can try to find rates that are as close to that number as possible. Here’s how.

1. Convert Before You Spend

If you plan to spend foreign currency in multiple transactions, convert your money all at once, not every time that you spend it. By doing so, you won’t have to pay flat fees repeatedly.

2. Negotiate a Rate

If you are dealing with foreign currency through your usual service provider, you may be able to argue for a lower rate. If you are working with a large amount of money or are a frequent customer, you may have leverage that will allow you to negotiate a better rate.

3. Compare Exchange Rates

If you are looking for a new service for forex trading, compare your options. Look at different services to find the best rates and spreads. Sites like myfxbook.com provide a way to compare market data.

4. Use a Reputable Service

Even if you can’t find an inexpensive option, you can at least be sure what you will pay. Use a reputable service that indicates how much you’ll pay before you convert your funds.

How Payset Can Help

If you’re planning to use foreign currency, Payset can help you to spend and trade your funds.

Support For Multiple Currencies

Our multi-currency IBAN accounts allow you to hold and exchange multiple currencies at once. By holding more than one currency, you can eliminate the need to consider mid-market rates every time you spend money.

Wide International Coverage

At Payset, you can exchange 38 currency pairs and hold up to 34 foreign currencies simultaneously. We also support transactions to 180 countries, offering nearly worldwide coverage.

Low Transaction Fees

In addition to avoiding high market rates, you can take advantage of our low transaction fees, which begin at 0.4%. Plus, you can always send money to other Payset accounts for free.

Click here to apply for an account.

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