The Mid-Market Rate, and Why You Do Not Get It
The rate published everywhere is the midpoint between two prices, and nobody transacts at a midpoint.
Still yours, and statedTaken, never statedUnit changes; scale restarts
Four steps from instruction to arrival. One step carries no figure: the hatching marks where the money leaves and is not drawn to scale, because there is no figure to draw. Nothing here adds them up, since an amount you cannot see is not an amount you can subtract. The unit changes part-way down: the figures below the break are in another currency, the bars below it are drawn against the published rate, and the first figure and the last are not the same kind of number. The section where the figures stop and the estimates start.
The rate you see quoted everywhere is the midpoint between the price at which the market buys a currency and the price at which it sells. Nobody transacts at a midpoint, including the institutions quoting it.
The payment record in “The Mid-Market Rate, and Why You Do Not Get It” becomes more useful when the work behind it is equally clear. A distributed team considering read the provider’s explanation for stealth computer monitoring software can connect approved time and projects with invoices or payroll inputs, while keeping exchange rates, fees and accounting decisions in the responsible financial system.
Knowing that stops two mistakes: expecting to get it, and failing to use it as the reference it actually is.
The questions in “The Mid-Market Rate, and Why You Do Not Get It” can also be checked against Stripe payment resources. Use the outside resource to identify what evidence to request rather than assuming one provider sees the whole payment chain.
What the midpoint is
Currency trades with a buy price and a sell price. The gap between them is the market's own spread. The midpoint sits exactly between, and it is a convention rather than a price.
Every rate site, every search result and every news report publishes the midpoint, which is why it looks like the real rate.
The market's own spread on major pairs is tiny, fractions of a basis point. Almost everything between the midpoint and what you received is somebody's margin rather than the market's.
Why it is still the right reference
Because it is public, dated, identical everywhere and not set by anybody you are dealing with.
Measuring what you received against it gives a comparable number across providers, corridors and months. That is all a reference has to do.
What a fair difference looks like
Rough bands, worth holding in mind:
- A specialist service on a major pair: a fraction of a per cent.
- A high-street bank: typically two to four per cent.
- A thin pair, or a small amount: more, sometimes considerably.
They turn a measured figure into a judgement, which is all a reference has to do.
Where to look it up
A central bank's published daily rate, or any major financial data source. For contract purposes, name the central bank: it is archived, dated and not a price.
For checking a payment, any reliable source is fine provided you note the date and time, since the rate moves during the day.
Timing matters more than people think
Rates move continuously. A payment converted at nine in the morning and one converted at four in the afternoon can differ meaningfully on a volatile day.
When measuring, use the rate for the day the conversion actually happened, not the day the payment was instructed or credited.
The rate you were quoted versus the rate applied
Services quote a rate before you commit and apply one when the transfer executes. Where those differ, the terms will say so.
Read whether the quote is held for a period. Some hold it for minutes, some for the day, some not at all.
Why banks do not publish their margin
Because it varies by customer, amount, corridor and time, and because a single published figure would be either wrong or binding.
That is a real commercial reason rather than a conspiracy. It is also why the only reliable method is measurement after the fact.
Rates that are not freely set
Some currencies are managed, pegged or subject to official rates that differ from what is actually available. In those cases the published midpoint may not describe anything you can transact at.
Where that applies to your pair it dominates everything else in this collection, and it is a question for somebody local rather than for a general note.
Using it in an agreement
Naming a published rate on a named date is how a contract fixes an amount without either side setting the price. It is covered in its own note and it rests entirely on this one.
The reference has to be reachable by both sides years later, which rules out anything proprietary.
Keeping a record of it
When you record a payment, record the midpoint for that day alongside it. Two seconds at the time, impossible later.
A year of payments with the reference rate beside each one is the only way to see whether a route has quietly got worse.
Explaining it to a payer
Most payers have never heard the term and assume the rate their bank gave them is the rate. Showing the midpoint for the same day is usually enough.
Do it without accusation. They did not set the rate and probably did not look at it.
What usually follows is that they ask their own bank, which is the conversation that actually changes something. You have no standing with their bank and they have an account there.
What the reference cannot tell you
Who took the difference. A gap of three per cent between the midpoint and what you received is a fact; whether it was the sending bank, a correspondent or your own bank is not visible from the two ends.
The midpoint gives you the size of the question and not its address. For most purposes the size is what matters, because it is what decides whether changing the route is worth the trouble.