Exchange Rate Markup Explained: How Providers Make Money

The mid-market rate (also called the interbank rate or real exchange rate) is the midpoint between the buy and sell price of a currency on the global market. It's the rate banks use when trading with each other — and it's the fairest rate available.

When you Google "USD to INR," the rate shown is the mid-market rate. No individual consumer gets this exact rate, but some providers come very close.

When a money transfer provider gives you an exchange rate, they add a markup — a small percentage difference from the mid-market rate. This is how they make profit on the transaction.

Example: If the mid-market rate is 1 USD = 92.30 INR:

• Wise (0% markup): Gives you 92.30 INR per dollar
• Remitly (0.45% markup): Gives you 91.88 INR per dollar
• Your bank (3% markup): Gives you 89.53 INR per dollar

On a $1,000 transfer, that 3% bank markup costs you ₹2,770 compared to the mid-market rate — and the bank may also charge a separate transfer fee on top.

The formula is simple:

Markup % = ((Mid-market rate − Provider rate) / Mid-market rate) × 100

For example, if the mid-market rate for USD/INR is 92.30 and your provider offers 89.53:

Markup = ((92.30 − 89.53) / 92.30) × 100 = 3.0%

To find the cost in dollars: $1,000 × 3% = $30 in hidden costs

Our comparison tool automatically calculates this for every provider, showing you the total cost including both fees and markup.

Based on our analysis of 2,215 real quotes across 42 providers:

• Wise — 0% markup (uses the real mid-market rate, charges a transparent fee instead)
• Instarem — 0.42% average markup
• Remitly — 0.45% average markup
• MoneyGram — 0.38% average markup
• OFX — 2.75% average markup (but no transfer fee)
• Banks (average) — 2.5–4% markup

Wise is unique in charging zero markup. They make money entirely through their upfront fee, which makes the total cost transparent and easy to understand.

Many providers advertise "$0 fees" or "fee-free transfers." This is technically true — they don't charge a separate transfer fee. But they compensate by offering a worse exchange rate with a higher markup.

A transfer with a $0 fee but 3% markup on $1,000 costs you $30. A transfer with a $7 fee but 0% markup costs you $7. The "$0 fee" option is actually 4x more expensive.

Always compare the amount the recipient receives, not just the fee. Our comparison tool shows this as the primary comparison metric.