How we calculate the exchange rate margin
The checker compares a transfer you were quoted against a published mid-market reference rate, then reports the difference as an estimated cost. It does not quote rates, and it does not compare providers. Every figure it uses about your transfer comes from you.
Where the reference rate comes from
Mid-market rates come from the Frankfurter API, an open-source service that publishes foreign exchange rates from central banks. We use its blended rate, which combines observations from many central bank sources rather than relying on one.
These are reference, spot and mid rates published by monetary authorities. They are dated benchmarks, not personalised provider quotes. Some providers use a mid-market rate and charge a separate fee. Their source and pricing time can differ from this daily publication, so the checker estimates a rate difference rather than proving the provider’s exact margin.
Central banks publish once per working day, so no rate is available for weekends or bank holidays. We show the date the rate was actually published rather than today’s date, and we never estimate a rate when the source is unavailable.
The formulas
Where S is the transfer amount entered, T is what your recipient receives, R is the daily reference rate and F is the stated fee. Total customer spend (C) is S for a deducted fee, or S + Ffor a fee charged on top:
total spend C = S (deducted fee), or S + F (added fee)
reference payout = C × R
shortfall = (C × R) − T in the receiving currency
estimated cost = shortfall ÷ R in the sending currency
estimated cost % = estimated cost ÷ C × 100
estimated rate gap = estimated cost − F
all-in rate = T ÷ CIf you know the rate you were quoted rather than the payout, we derive the payout first. That calculation depends on whether the fee was taken off before conversion or charged on top, which is why the form asks: the two give different answers, and assuming one silently is a common way for these calculations to go wrong.
Worked example
A £50,000 transfer quoted at 1.1200 when the mid-market rate is 1.1500 delivers €56,000 rather than €57,500. The shortfall of €1,500 divided by 1.1500 is £1,304.35 — 2.61% of the amount transferred. With no separately stated fee, that £1,304.35 is the estimated exchange rate difference against the reference.
If a £1,000 transfer has a £10 fee charged on top, total spend is £1,010. At a reference rate of 1.20 and a quoted rate of 1.20, the recipient gets €1,200: the estimated cost is £10, entirely the stated fee, with no rate difference. These are illustrative figures, not a provider quote.
Limitations
- The reference rate is a once-daily published figure. Your provider priced at a specific moment, and may have used a different reference source, so small differences are expected and do not indicate an error.
- A quote can legitimately come out better than the reference rate for the same date. That is a timing effect, not a profit.
- We assume any fee you enter is in the currency you are sending. Fees charged in another currency are outside what this tool handles.
- Intermediary or receiving-bank charges deducted after the transfer leaves your provider are not visible to this calculation. If your recipient received less than expected, that is a common reason.
- A rate difference against this benchmark is not proof of a hidden fee or an exact provider margin. Compare quotes taken at similar times for the same route, total spend, funding method and payout method.
What we do with your figures
The numbers you enter are used to render your result and are not sent to any third party. They appear in the page address so you can bookmark or share a result, which also means you should treat that link as you would any other record of your finances.