International CurrencyInternational Currency

What is the market rate?

When it comes to making an international money transfer, it seems natural to go through the options most readily available, like your bank, or when you’ve arrived at the airport. The problem here is that when you use these methods, you could get burned by the higher fees and larger margins on their market exchange rates. So what are these ‘market’ rates, and how do they impact your transfer? We break it down below.
What is the market rate

What is the market rate?

The market rate, also known as the ‘interbank’ or ‘mid-market’ rate, is used primarily for consumers as a benchmark. It is essentially a ‘wholesale’ rate that is typically only available to large financial institutions, like banks, when they purchase large amounts of currency.

That’s often not the rate that is then translated to the customer when they lock in a rate to make a transfer. Often, banks can charge a margin of up to 5% on the market rate when they send your money overseas which, depending on the size of your transfer, could end up costing you hundreds of dollars. Say for example you wanted to transfer $10,000 AUD, with that 5% margin, you’d be paying up to $500 on top of the banks fees. Ouch.



How does the market rate impact your transfer

So how does this affect my transfer?

If you’ve made a transfer through your bank, or converted your funds at an airport, you’ve been overcharged. The problem with transferring money via these methods is that, while their upfront fees might not be that extravagant, the real costs are hidden in the margins. 

So for example, if you wanted to transfer that $10,000 AUD into USD with a standard bank rate, you’d receive $6,965 USD in return. With an OFX customer rate, you’d receive $7,235 USD. That’s a saving of $270!* This means the rate that the bank has given you has a higher margin than what a specialist money transfer service like OFX would provide on your transfer.

Protect against market volatility

What can I do to protect myself against being overcharged?

It might seem easier to go through with your bank to make a transfer, but it helps to shop around for a money transfer provider that can offer low fees and smaller margins. At OFX, we marry this philosophy with excellent customer service to bring the best experience that encourages our customers to return time and time again. Think of the savings!


You can view live market rates, and use our currency charts to check your preferred currency pair and how you can best save on your international money transfer. Register now to get started, it’s free!

*Source: Exchange rates are based on a single transfer of $10,000 AUD to USD from the live conversion rate on and the ANZ Currency Converter webpage as at 12/11/2018.





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