What Do I Need to Know About Transfer Rates?

. 3 min read

In a perfect world, there would be one consistent, universal exchange rate, and you’d always know exactly what you’d get whenever you make a money transfer. In the real world, currency values are constantly subject to change, and the exchange rate you see one day could be drastically different the next.

When people want to transfer, rates are a common source of questions and confusion. If you need to make a transfer but are stuck on the rates, let us break it down and tell you what you really need to know about your transfer rates.

Where do transfer rates come from?

Let's start with the Xe rate. Our rates come from live data straight from the global foreign exchange markets. These rates are updated in real time, so you can trust that you will see the most accurate, up-to-date rates, even if you check multiple times per day.

But this isn't going to be the case for every institution. Banks and financial institutions will set their own transfer rates based on the markets as well as their own operations, and these rates can vary. Let the numbers speak for themselves—these rates are likely to favor the institution, not your transfer.

What affects transfer rates?

Here’s a better question: what doesn’t affect the rates? Currency values are constantly in flux. They can be—and are—affected by real-word events such as:

  • Inflation
  • Political happenings
  • Recession
  • Interest rates
  • Disasters
  • And much, much more.

Recently, events like cut interest rates and coronavirus panic have had tangible impacts on major world currencies—and this time tomorrow, their values could change again.

What about the mid-market rate?

If you’ve been looking into money transfer, odds are you’ve come across the phrase mid-market rate at some point in your research. You might be wondering what that is, what it means for you, and whether that's what you should be looking for in your transfers.

The term mid-market rate refers to the exact midpoint between:

  • A currency’s buy rate (the rate at which a foreign exchange provider is willing to buy a currency), and
  • The currency's sell rate (the rate at which the provider would be willing to sell you the currency).

To use another economic term, think of this as the midpoint between supply and demand.

To put it in everyday, human terms, the mid-market rate is the true, honest rate. It's the rate of exchange without any added margins or fees hidden inside.

We have used the mid-market rate for our informational and money transfer services for over 25 years. This means that when you check the rates and transfer with Xe, you're getting the fairest, most accurate currency exchange rate.

What if I don’t like my rate?

So you’ve put your currencies in the Currency Converter, and the rates aren’t in your favor. That might seem like bad news, but here’s the good news: that will likely change soon. An unfavorable rate today could be a great rate tomorrow.

And here's more good news: you’re not doomed to constantly checking the rates every day in hopes of eventually encountering the right one. If you have a transfer rate in mind, you can target your ideal rate now by doing one of the following:

  • Set a rate alert that will notify you when your desired rate is live in the markets.
  • Set up a market order to automatically send your money for transfer once your rate is live.
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Rates: the main takeaway

If you’re looking to make a money transfer, rates are inevitably going to be a major part of the process. There’s no way to avoid dealing with the rates, but understanding where the rates come from and how they work can help you to navigate the transfer process and make the best decisions for your needs.

Got further questions about money transfer? Our money transfer page may have the answers you’re looking for. Feeling ready to make a transfer? Here’s everything you’ll need to know about the process, from signing up to making the transfer.