What is a forex spread? How exchange rate markups work
By SendPay Business · · 2 min read
A forex spread is the gap between the price at which a currency can be bought and the price at which it can be sold. When you change money, the spread is often where most of the cost sits, even when the provider says there's no fee.
Buy price, sell price
Currency markets quote two prices for each pair: the bid (what buyers pay) and the ask (what sellers want). The mid-market rate sits halfway between them. Banks and money apps then set their own customer rate, usually a little worse than the mid-market rate.
How to work out the real cost
- Find the mid-market rate for the currency pair at the time you change money.
- Compare it with the rate you're offered.
- Divide the difference by the mid-market rate to get the markup as a percentage.
- Add any fixed fee on top to get the total cost.
Why spreads change
Spreads are usually narrower on busy pairs like pounds to euros or dollars, and wider on less traded currencies, at weekends when markets are closed, or when prices are moving fast.
If you run a money app
The exchange rate you offer is part of your pricing, and customers compare it. SendPay platforms include currency exchange between GBP, EUR and USD accounts, and you set your own fees on your platform.
Build it
Create your own financial platform.
Pick a template, name it, brand it, preview every page before you pay. Your brand, your users, your fees.
Build my platform →Questions people ask
How do I work out what a spread costs me?
Enter the bid and ask prices and your trade size, and the free calculator shows the spread in pips and its cost per trade, per month and per year.
Forex spread calculator →What is the mid-market rate?
The halfway point between buy and sell prices. The guide explains it.
What is the mid-market rate? →How much does a transfer really cost?
The free calculator adds the fee and the rate markup together.
Money transfer cost calculator →Could I start a currency exchange business?
The guide covers what's involved.
Start a currency exchange business →Read next
This guide is general information, not legal or financial advice. SendPay Business is a technology company, not a bank, and does not take deposits; regulated services on the platforms are provided by licensed partners. PayPal, Patreon and Substack are named as reference points only and are not affiliated with SendPay Business.