Our spread explained: How to calculate the foreign currency exchange margin
Uncloak the hidden fees: Compare the forex currency margins of international money transfers in real-time.
Imagine you are at the airport in Switzerland and need to get the local currency. At the Airport are two different bureaux de change (currency exchange offices), which are offering you 2 different exchange rates.
You want to change 100 Euros into Swiss Franc and find out what is the best offer to change your currencies.
- Money Changer 1: 1 Euro = 1,10 Swiss Franc + 5 CHF exchange fees (You receive 105 CHF)
- Money Changer 2: 1 Euro = 1,08 Swiss Franc (You receive 108 CHF)
You will receive more money at the second currency exchange office, although it is not clear how much money you pay for your currency exchange transaction in comparison to the live exchange rate.
Choose a reference exchange rate to compare the forex margin.
For calculating the currency exchange rate margin, you need to use a reference source you can trust.
At CompareTransfer, we are using XE.com as a reference exchange rate provider.
When the Internet was almost new in 1993, XE was founded to provide real currency live exchange rates online. XE was quickly established as a trusted source to verify the forex rates. XE has acquired a great reputation for offering real currency data because they get their currency exchange rates from authentic sources like central banks and did not have any downtime over the past 18 years.
This is why we are offering authentic pricing information on over 7500 money transfer corridors internationally.
This is why we are trusting at CompareTransfer the XE live exchange rate to verify the exchange rate margin of money transfer providers like TransferWise, WorldRemit, Remitly, Skrill, TransferGo, and more. Meanwhile, in 2021, you also can book money transfers online with XE. At the exchange office in Switzerland, you also could use the Visa, MasterCard, or Google rate as a reference to calculate the margin.
- Reference Exchange Rate: 1 Euro = 1.11 Swiss Franc (100 Euro = 111 Swiss Franc)
- Money Changer 1: Receive 105 CHF (+5 Euro Euro Margin + 1 Euro Exchange Fees)
- Money Changer 2: Receive 108 CHF (+3 Euro Margin)
The difference between the reference exchange rate and the custom quotes is the forex margin. The exchange fees will be added on top to calculate the real fees for currency exchange transactions.
The same model we have used for the currency exchange offices to calculate the fees also applies at CompareTransfer.
TransferWise is using the “real mid-market exchange rate” for international money transfers. In our example, the exchange rates of XE.com and TransferWise are identical, while TransferGo is 1 Euro below that. The currency spread will be added to the transfer fees and be displayed as the CompareTransfer pricing.
Compare the spread of over 10 money transfer providers with CompareTransfer
- Azimo Live Spread
- CurrencyFair Live Spread
- TransferGo Live Spread
- TransferWise Live Spread
- Skrill Live Spread
- Remitly Live Spread
- WorldRemit Live Spread
- And more live exchange rates