Exchange rates on international payments: the mid-market rate, margins and quotes

When you send money abroad, the exchange rate you are offered is rarely the one you saw online that morning. The Financial Ombudsman, which settles disputes between consumers and financial firms, puts it plainly: "the rates you see online and in newspapers are just a guide. Each bank sets its own rates."¹ Those guide rates, often called the mid-market rate, are the midpoint between the prices at which the wholesale market is buying and selling a currency at any moment. Providers take that midpoint, add their own margin, and that margin is often the largest single cost of an international payment, larger than any visible fee.

This page explains what the mid-market rate is, how the margin works, what fees sit on top of it, and how to compare quotes from different providers on a like-for-like basis. It also covers where the rules protect you: what a provider must disclose when it converts your money, what the ombudsman can look at if the rate you got was not the rate you were quoted, and where consumer contract law deliberately stops short for currency deals.

What the mid-market rate is

An exchange rate is simply the price of one currency compared with another. The Post Office's guide to travel money rates, updated in September 2026, defines it in those terms: "an exchange rate is the price of one currency compared to another"⁶. Whatever currencies are involved, the rate tells you how much of one you get for a unit of the other.

The mid-market rate, sometimes called the interbank rate or the reference rate, sits halfway between the price at which the wholesale market is willing to buy a currency and the price at which it is willing to sell it. It is the figure you see on currency converter websites, in newspapers and in search engine results. Because the wholesale market moves constantly, the mid-market rate changes from minute to minute during trading hours, and any figure you look at is a snapshot of a moment that has already passed.

Two things follow from this. First, no consumer gets the mid-market rate. Banks, transfer firms and card schemes all convert at their own rate, which is the mid-market rate plus a margin, and that margin is their revenue from the conversion. Second, the mid-market rate is still the yardstick that matters, because it is the one figure every provider starts from. When you compare quotes, the useful question is not "what rate am I getting?" but "how far below the mid-market rate is it, and what else am I paying?"

Reference rates and why they are only a guide

Published reference rates exist so that everyone in the market can point to the same benchmark. The European Central Bank publishes a daily set of euro reference rates, and other institutions publish their own. These are official, transparent and free to check, which is why they appear in converters and news pages.

But a reference rate is a record of the market at a particular moment, not an offer to trade. The Ombudsman's guidance on sending money abroad is explicit that the rates consumers see are indicative only, and that each bank sets its own rates¹. An indicative rate tells you roughly what your money is worth; it does not tell you what any provider will actually give you, because that depends on the provider's margin, its fees, the size of your transfer and the moment you transact.

The distinction matters most on large transfers. A margin of a few per cent is barely noticeable on holiday money but is substantial on the price of a property abroad or a pension being moved to a new country. Support material on international transfers puts bank exchange rate markups at up to 5% in one source and 5 to 6% in another, and even the lower figure means a £100,000 transfer could cost several thousand pounds in rate alone, before any fees¹.

Each bank sets its own rate, with a margin built in

Because each provider sets its own rate, two firms can quote noticeably different amounts of foreign currency for the same sterling on the same morning. The margin is usually expressed as a percentage of the mid-market rate, and it can vary by provider, by currency and by the size of the payment. Lloyds Bank, for example, publishes exchange rate margins for its international services, with figures including 3.55% and a range described as 3.55% to 2.40% in different parts of its guidance; the documents are not consistent, so treat any single figure as illustrative rather than exact¹. Lloyds also states that accounts held with Lloyds (International Services) Limited until 1 August 2022 fall into a separate group for exchange rate margin purposes, so the margin a customer is charged can depend on which part of a bank holds the account¹.

The practical effect is that the exchange rate is a price, not a fact. Just as two shops can charge different prices for the same item, two providers can apply different rates to the same transfer, and neither is obliged to match the other or the mid-market rate. This is why comparing the total amount of foreign currency delivered, rather than the headline rate or the headline fee, is the only reliable test.

The margin also explains a common experience: the rate you are offered can differ from the rate you were quoted earlier. Rates move, quotes expire, and the rate that applies is the one in force when the conversion actually happens, not when you first looked.

Fees and charges on top of the exchange rate

The margin is rarely the only cost. A typical international payment can carry several separate charges, and they are not always easy to see in advance.

• A payment fee from your own bank. One published bank tariff charges £25 to send money outside the UK by SWIFT from a sterling account, €29 from a euro account and US$40 from a US dollar account, with no charge for SWIFT payments in euros³.
• A foreign exchange fee on card use. Current accounts typically charge a foreign exchange fee of around 3% of the transaction amount when you use your debit card abroad, according to MoneyHelper, the government-backed money guidance service².
• Charges from other banks in the chain. Payments that travel through correspondent banks can pick up fees along the way; how that works is covered in how international payments work.
• Platform FX fees when investing. Independent guidance from Which? found that transactions on international shares and funds incur foreign exchange fees ranging from 0.45% to 1.5% on amounts up to £5,000, varying by platform⁵.

The card fee environment abroad has also changed. The Payment Systems Regulator notes that consumer cross-border card payments between the UK and the EU, where either the acquirer or issuer is based outside the UK's jurisdiction, are no longer subject to the interchange fee caps that applied when the UK was in the EU⁷. The regulator has also reported that interchange fees are no longer capped when the holder of a non-UK-issued card buys from a UK merchant⁸. Interchange fees are paid between banks and card schemes rather than by you directly, but they feed into the overall cost of card use, and a parliamentary report on card fees noted that interchange fees may be up to 35p for off-premises or "remote" cash machines⁹.

Currency conversion offered at the till, the cash machine or by the payee

One situation where the rules are explicit is known as dynamic currency conversion: when a card machine abroad, a cash machine, an online checkout or the payee itself offers to convert your payment into pounds (or another currency) at the point of spending, rather than letting your own bank or card scheme do the conversion.

Here the law is on your side. The Payment Services Regulations 2017 provide that "the party offering the currency conversion service to the payer must disclose to the payer all charges as well as the exchange rate to be used" before the payment is made⁴. The underlying EU directive, which the UK rules implemented, states the same in terms: the party offering the service "shall disclose to the payer all charges as well as the exchange rate to be used, and the payer shall agree to the service on that basis"¹⁰. In other words, you must be shown the total cost and the rate, and you must accept it, before the conversion happens.

That does not mean the offered rate will be a good one. Conversion offered at the point of sale is frequently worse than the rate your own provider would apply, and the disclosure duty means you can see that before agreeing. Declining the conversion and letting your bank apply its own rate and fees is one option; comparing the two figures on the spot is the way to decide. Your wider rights when paying are covered in your rights under the Payment Services Regulations.

Do banks have to tell you their margin?

For a standard international transfer, there is no rule requiring a bank to publish its exchange rate margin as a single figure. The UK government had the opportunity to require transparency in foreign exchange pricing when it implemented the revised EU payment rules, and in 2017 it published its response declining to do so, on the grounds that adding requirements beyond the EU directive would be unnecessary¹¹. The margin therefore usually has to be inferred by comparing the rate you are offered with the mid-market rate at the time.

There are pockets where exchange rate risk must be spelled out. The EU mortgage credit directive requires measures to ensure consumers are aware of exchange rate risk where a mortgage is denominated in a foreign currency, and can limit their exposure through conversion rights, caps or warnings¹². When the UK consulted on implementing those rules, the proposed "top-up" disclosures included a 20% exchange rate change illustration, showing borrowers what would happen to their payments if the rate moved that far against them¹³. The FCA's mortgage rules also require firms to use market expectations rather than their own forecasts when illustrating future rates, giving the forward sterling rate published on the Bank of England website as an example¹⁴.

For everyday transfers, the practical position is that disclosure duties apply at the point of conversion (as with card payments above), but not to the margin built into a bank's standing exchange rate. This is why the comparison method in the final section of this page matters: if no provider will state its margin, you have to measure it yourself.

Which day's rate your payment gets

Because rates move constantly, the timing of your payment changes what you get. The rate that applies is the one in force when the provider actually converts your money, which may be hours or days after you instructed the payment, particularly if the payment is queued overnight, crosses a weekend, or passes through correspondent banks in different time zones. Cut-off times, holidays and delays are covered in how long an international payment takes.

The Payment Services Regulations recognise this. They provide that "changes in the interest or exchange rates may be applied immediately and without notice" where the change is based on reference rates provided to the user, or where the change is more favourable to the user⁴. So a provider can move its rate with the market without warning you, provided the rate it uses is tied to a reference rate you can check, and it cannot spring a worse rate on you outside that framework.

Timing also matters for tax and share transactions. HMRC guidance on stamp duty states that amounts in overseas currencies must be converted to pounds sterling "using the exchange rate, either: on the date of the transfer or agreed between the buyer and seller"¹⁵. And where shares are transferred, the tax treatment can be significant in itself: where the overseas transfer charge arises, the charge is 25% of the transferred value¹⁶. Neither changes the rate your bank gives you, but both show that the date a conversion is deemed to happen can be a matter of agreement rather than a fact of the market.

Spot transfers: a live rate, often sent the same day

A spot transfer is the simplest kind of international payment: you instruct the transfer, the provider converts your money at its live rate at that moment, and the funds are sent. The Ombudsman describes the basic product in these terms: "an international money transfer allows people to send funds from a UK account to another account in different country"¹. For high-value transfers, CHAPS is a system used for high-value transactions, where money is transferred from one bank to another on the same day¹⁷.

The trade-off with a spot transfer is certainty of timing against certainty of rate. You know roughly what the rate is when you instruct the payment, but you accept whatever the market is doing at that moment. If the rate has moved against you since you first looked, there is no mechanism to wait. The alternative approaches, forward contracts and limit orders, are covered in fixing an exchange rate, and the different routes, from banks to specialists, in ways to send abroad.

Auto conversion: waiting for a rate you set

Some providers offer a way to wait for a better rate rather than accepting the live one. You set a target rate, the provider watches the market, and your money converts automatically if and when its rate reaches your target. The Post Office travel money card works on a similar principle for holiday money: you can "lock in exchange rates at the time of loading", with the rate based on your total order value⁶.

The risk is on the downside of the order: if the market never reaches your target, your money stays unconverted, and in the meantime the rate may move further away. A target rate is a bet on direction, and like any bet it can lose. Orders also have terms: an end date, cancellation rules, and possibly a fee, all of which vary by provider. For regular overseas commitments such as a foreign mortgage, the trade-offs are discussed in regular payments abroad.

Where consumer contract rules stop for currency deals

Consumer law generally protects against unfair terms and misleading prices, but currency dealing has long been carved out of parts of it. The Consumer Rights Act 2015 provides that certain paragraphs of its unfair terms schedule "do not apply to contracts for the purchase or sale of foreign currency, traveller's cheques or international money orders denominated in foreign currency"¹⁸. The same exclusion appeared in the earlier Unfair Terms in Consumer Contracts Regulations 1999, which exempted contracts for foreign currency and financial products whose price is linked to fluctuations in a market rate the seller does not control¹⁹.

There is a logic to this: a currency price moves with a market the seller does not control, so a rate that looked fair at noon can look poor by the evening without anyone having acted unfairly. But it means you cannot rely on the usual contract protections to challenge a rate after the fact simply because it moved.

One specific rule does still bite on how rates are displayed. The Price Indications (Bureaux de Change) Regulations 1992 govern how exchange rates are indicated to consumers, though regulation 4 does not have effect in relation to an exchange rate indication given by way of a net price to a consumer who has made a specific request for a net amount²⁰. In plain terms: a bureau must indicate its rate in the prescribed way when advertising, but if you walk in and ask for a specific amount in the currency you want, the net figure it quotes you is not caught by that particular rule.

Comparing quotes: rate, margin and fee together

Because no provider states its margin in a standard place, the only reliable comparison is the total outcome. Take the amount of foreign currency each provider will deliver for the same sterling sum, on the same day, by the same method, and compare those figures directly. That single number captures the margin, the fees and any other deductions in one place.

A few practices make the comparison honest:

1. Ask for the amount of foreign currency that will arrive, not the rate. The delivered amount is the figure that cannot be fudged.
2. Check whether fees are deducted from the sterling you send or from the foreign currency received, because this changes the delivered amount even at the same rate.
3. Compare quotes close together in time. Rates move, and quotes taken hours apart are not comparable.
4. Ask whether the quote is indicative or guaranteed. An indicative rate can change before the payment is made; a guaranteed rate is the rate you get.
5. For card use abroad, compare the foreign exchange fee percentage, which MoneyHelper puts at around 3% of the transaction amount for many current accounts², against the rates offered by specialist cards or travel money cards.

The difference between providers can be material. On the evidence above, bank payment fees alone range from no charge for euro SWIFT payments at one bank³ to £25 or more for other currencies at the same bank, and rate margins range from around 2.40% to 3.55% in Lloyds' own published figures¹, with support material on the wider market putting markups at up to 5% in one source and 5 to 6% in another¹. The trade-offs between banks and specialists are set out in banks vs specialist providers.

Complaints, protection and scams

If the rate you received was not the rate you were quoted, or fees were taken that were not disclosed, you can complain to the provider first and then to the Financial Ombudsman Service, which handles complaints about banking and payments, including sending money abroad¹. The ombudsman can look at whether the provider acted fairly, whether it disclosed what it had to, and whether the outcome you received matched what you were told.

Two protections are worth knowing. First, firms authorised by the Financial Conduct Authority must safeguard customers' money, which is explained in safeguarding and the FSCS. Second, the disclosure rules described earlier apply to conversion offered at cash machines, at the till and by payees: all charges and the exchange rate must be disclosed before you agree⁴.

Free, impartial help is available from MoneyHelper, and the ombudsman's own guidance on sending money abroad explains what it can and cannot consider¹. For the wider picture of costs and routes, start with sending money in the UK and abroad.