The mid-market rate
Every currency market has two prices at the same moment. The bid is what a dealer will pay you for a currency. The ask, or offer, is what the dealer charges when you buy it. The ask is always higher, and the gap is the spread. The mid-market rate is the point exactly halfway between the two:
Take an example quote for euros against dollars: bid 1.1150, ask 1.1194 dollars per euro. The midpoint is 1.1172. The spread is 0.0044 dollars per euro, and anyone who buys at the ask is paying 0.197% above the midpoint. A provider that sells to travelers or shoppers can also add its own margin on top, which moves the rate you see further from the midpoint.
How a markup hides in the rate
A markup is a percentage added to the rate before you see it. If the mid-market rate is 1.1172 dollars per euro and the provider adds 3 percent, you are quoted 1.1507. The conversion is still "free" in the sense that no separate fee appears on the receipt. The cost sits inside the number.
The formula only works when both rates are quoted the same way round. "Dollars per euro" and "euros per dollar" are inverses of each other, and mixing them up turns a bad offer into one that looks generous.
A 3% markup, worked through
You change $2,000.00 into euros. At the ECB reference rate of October 30, 2026, 1.1172 dollars per euro, the money is worth €1,790.19. A provider with a 3 percent markup quotes 1.1507 and hands you €1,738.05. You get €52.14 less, which is $58.25 at the reference rate.
That is 2.91% of your money, not 3 percent, because the markup is added to the rate and you divide by it. The percentage calculator shows the same effect with any two numbers: adding 3 percent and then taking it back off does not land on the starting point.
What each markup costs on $1,000
The same calculation for $1,000.00 changed into euros at the ECB rate of October 30, 2026. The cost is the dollar value of the euros you do not get.
| Markup | You get | Cost | Share of $1,000 |
|---|---|---|---|
| 0.5% | €890.64 | $4.98 | 0.50% |
| 1% | €886.23 | $9.90 | 0.99% |
| 2% | €877.54 | $19.61 | 1.96% |
| 3% | €869.02 | $29.13 | 2.91% |
| 4% | €860.67 | $38.46 | 3.85% |
| 5% | €852.47 | $47.62 | 4.76% |
| 7% | €836.54 | $65.42 | 6.54% |
| 10% | €813.72 | $90.91 | 9.09% |
Below 5 percent the cost is close to the markup itself. At 10 percent it is 9.1%. The currency converter gives the reference value for any amount, which is the number to hold the offer up against.
Changing money back
A markup works in both directions. When you sell currency back, the provider pays you less than the mid-market rate instead of charging you more. Say you return with €300.00. At the reference rate that is $335.16. With 3 percent taken off the rate you receive $325.11.
A full round trip stacks both sides. $1,000.00 changed to euros with a 3 percent markup and straight back with 3 percent off the rate returns $941.75, a loss of 5.83% with nothing bought. Spending leftover cash before you go home, or changing only what you need, avoids paying the spread twice. The travel budget calculator helps estimate how much cash a trip actually needs.
How to check an offer
Look up a reference rate for the same day, write the offer the same way round, and compare.
- Offer in dollars per euro. A counter sells euros at 1.20 dollars each. Against 1.1172, the markup is 7.41%.
- Offer in euros per dollar. Another counter gives 0.86 euros per dollar. The reference is 1 ÷ 1.1172 = 0.8951 euros per dollar, so you get 3.92% less than the reference.
- Offer as a total. If you only see "you pay X, you get Y", divide one by the other to get the rate, then compare it as above.
Card payments abroad follow the same logic, with the card network's rate in place of the counter's, plus any foreign transaction fee your card agreement lists. The guide to foreign transaction fees covers that part. When a card terminal offers to charge you in your home currency, the markup is set by the terminal's provider; the guide to dynamic currency conversion shows how to read that offer.
Official reference rates
Two free public sources cover most needs for a US reader.
- ECB euro reference rates. The European Central Bank publishes rates for 29 currencies against the euro on working days, usually updated around 16:00 CET. They come from a daily consultation among central banks that normally takes place around 14:10 CET. The ECB says they are for information purposes only and strongly discourages using them for transactions, which is exactly why they work as a neutral benchmark.
- Federal Reserve H.10. The H.10 release lists daily rates against the dollar and appears weekly; the G.5 release has monthly averages. The Fed describes the data as noon buying rates in New York for cable transfers, certified for customs purposes by the Federal Reserve Bank of New York. On October 23, 2026 it listed 1.1199 dollars per euro.
The ECB rates are quoted as units of each currency per euro. Dividing the dollar rate by another currency's rate gives a cross rate against the dollar. For October 30, 2026:
| Currency | Per euro | Dollars per unit |
|---|---|---|
| US dollar | 1.1172 | 1.0000 |
| Pound sterling | 0.8338 | 1.3399 |
| Swiss franc | 0.9194 | 1.2151 |
| Japanese yen (per 100) | 175.68 | 0.6359 |
Rates from different days, times or sources will not match to the last digit, and a cross rate computed this way is a reference, not a price anyone will trade at. For checking a markup that precision is more than enough: an offer that is 3 percent or more away from either source is 3 percent or more away from the market.
Exchange rate tables and receipts identify currencies by three-letter codes such as USD and EUR. The guide to currency codes and symbols explains the system.
Frequently asked questions
What is the mid-market exchange rate?
It is the midpoint between the price at which the market buys a currency and the price at which it sells it. No retail customer trades at exactly that rate. It is the neutral yardstick you compare every offer against, because it contains no spread and no markup.
Is the ECB reference rate the mid-market rate?
Not exactly. The ECB sets its euro reference rates once a day from a consultation among central banks and says they are published for information purposes only. It strongly discourages using them for transactions. They are, however, a free, public and neutral benchmark, which makes them useful for checking how far an offer is from the market.
Why does a 3% markup cost me less than 3%?
Because the markup is added to the rate, and you divide your money by that rate. Dividing by 1.03 leaves you with about 97.09 percent of what the mid-market rate would give, so the loss is about 2.91 percent. On $2,000.00 that is $58.25. The difference is small, but it is why two offers described differently can cost the same.
How do I work out the markup on an exchange rate?
Divide the rate you are offered by a reference rate for the same day and subtract 1, with both quoted the same way round, for example dollars per euro. An offer of 1.20 dollars per euro against a reference of 1.1172 is a markup of about 7.4 percent. If the offer is quoted the other way round, euros per dollar, the shortfall is 1 minus offer divided by reference.
Does a zero commission exchange cost nothing?
Only if its rate equals the mid-market rate. A provider can charge no fee and still earn money by giving you a worse rate. Compare the total you get for your money, or the markup against a reference rate, rather than the fee alone.
Sources
- European Central Bank: Euro foreign exchange reference rates (rates usually updated around 16:00 CET on working days, concertation around 14:10 CET, 29 currencies, for information purposes only; rates for October 30, 2026)
- Federal Reserve Board: H.10 Foreign Exchange Rates, weekly release (rates per dollar or dollars per unit; 1.1199 dollars per euro on October 23, 2026)
- Federal Reserve Board: About the H.10 and G.5 releases (noon buying rates in New York for cable transfers, certified for customs purposes by the New York Fed; weekly release, G.5 monthly averages)
General information based on the sources above, not tax, legal or financial advice.