What is the interbank exchange rate and how can you get it?

Key takeaways

• The interbank exchange rate (or mid-market rate) is the wholesale benchmark rate that global banks use to trade currency with one another, sitting at the midpoint of the bid-ask spread.

• Traditional Australian banks rarely pass this rate on to businesses. Instead, they stack a flat transfer fee and an undisclosed FX margin on top, creating a hidden cost that eats into profit margins. Correspondent bank fees may also apply.

• Airwallex gives Australian businesses a transparent, capped margin – 0.50% on major currencies and 1% on others – applied directly to the interbank rate, with no hidden fees or undisclosed markups.

When global banks trade trillions of dollars in foreign currency every day, they do it at razor-thin wholesale rates. When your Australian business pays an international invoice, you're usually quoted a retail rate loaded with hidden markups.

This guide defines the interbank rate, shows exactly how Australia's Big Four banks stack their fees on top of it, and gives you a practical way to bypass their margins. 

What is the interbank exchange rate?

The interbank exchange rate is the wholesale benchmark price that major financial institutions and central banks use to trade high-volume currency blocks with each other. 

The wholesale benchmark

The interbank market is the foundational tier of global currency trading. It's a decentralised, over-the-counter network where banks, investment firms and central banks trade directly with one another – typically in blocks of five million units of currency or more. Because trade sizes and participant scale are so large, spreads on major currency pairs are razor-thin.

The bid-ask midpoint

Pricing in the wholesale market is set by the bid-ask spread. The "bid" is the price a buyer will pay for a currency; the "ask" is the price a seller will accept. The interbank rate sits at the exact midpoint:

Interbank rate = (bid + ask) ÷ 2

This gives a neutral, non-arbitraged baseline for a currency pair's true market value at any given moment.

Market microstructure

Because the market is decentralised, price discovery happens through electronic broker platforms rather than a single exchange. The two main venues are:

• Electronic Broking Services (EBS): Owned by CME Group, the leading electronic order book for high-volume pairs like EUR/USD, USD/JPY and USD/CHF.

• LSEG FX Matching (formerly Refinitiv Matching): A major institutional system used for spot FX across a broad range of pairs, including secondary majors and commodity currencies like the AUD.

Trades on these networks settle through the Continuous Linked Settlement (CLS) network, which processes both sides of an FX trade simultaneously to eliminate settlement risk.

Is the interbank rate the same as the mid-market rate?

Yes. In everyday business finance, "interbank rate", "mid-market rate", "spot rate" and "real exchange rate" all refer to the same neutral benchmark.

The terms differ only in context:

• Interbank rate: The term used behind the scenes by financial institutions trading with one another.

• Mid-market rate / spot rate: The same rate shown publicly on Google, Bloomberg or Yahoo Finance.

• Real exchange rate: A term some fintechs use to signal their pricing matches the public benchmark, free of hidden markups.

The catch: this rate is publicly visible, but traditional banks don't hand it to business customers by default. Instead, they treat it as their wholesale cost and build a marked-up retail rate on top.

How do you find the interbank rate?

You can find the interbank rate through multiple sources. Google's currency converter displays the current interbank rate when you search for any currency pair like "AUD to USD". Financial websites such as Yahoo Finance also publish real-time interbank rates.

For Australian businesses, the Reserve Bank of Australia provides official daily exchange rates, while currency converter apps also offer convenient access to current rates. Keep in mind that interbank rates change constantly throughout the trading day – potentially several times per minute during active market periods.

How do Australian banks mark up the interbank rate?

Australian banks build their margin into three stacked layers – a flat sending fee, a correspondent bank charge, and an FX margin buried in the exchange rate – and none of it has to appear as a single line-item cost.

In July 2024, the ACCC¹ published an updated report on international money transfer services, finding the Big Four banks remain consistently more expensive than non-bank providers for cross-border transfers. According to the ACCC:

• On a standard $3,138 international transfer, a business could save around $108 by switching to a lower-cost non-bank provider.

• On a $10,000 transfer, switching saves more than $400.

How the fees are structured

1. Flat transfer fee: Charged upfront, varying by channel (app, phone or branch).

2. Correspondent bank fee: Charged by intermediary banks routing funds through the SWIFT network – often deducted from the amount in transit, so the recipient receives less than invoiced.

3. FX margin: The biggest cost driver. A percentage-based markup built into the exchange rate, rarely disclosed as a separate cost.

Some banks also advertise "$0 transfer fees" on online transfers sent in foreign currency. That makes the transfer look free – but the bank's margin is simply built into the exchange rate instead of shown as a fee.

Big Four international transfer fees 

How can businesses access the interbank exchange rate?

Modern platforms bypass correspondent banking by clearing transactions through local rails in multiple countries – settling funds locally instead of routing them through intermediary banks, and passing the wholesale saving on to customers.

How can businesses lock in the interbank exchange rate?

Multi-currency wallets and local accounts

Hold and receive foreign currency directly instead of converting twice – once when it arrives, and again when you pay it out. This avoids "forced double conversion", where incoming revenue is converted to AUD at a marked-up rate, then converted back to pay a supplier. Read more on how multi-currency accounts work.

Forward contracts

A forward contract lets you lock in an exchange rate today for a transaction settling up to 12 months ahead depending on eligibility. The forward rate is adjusted from today's spot rate based on the interest rate differential between the two currencies over the contract period, giving budget certainty for future payments.

Limit and stop-loss orders

Set a target rate to trigger an automatic conversion (a limit order), or a worst-case threshold to protect against sudden downside moves (a stop-loss order).

How do you find your provider's FX markup?

Run this three-step audit on a past or upcoming transaction:

1. Pull the mid-market rate that applied at the time of the transaction, from an independent source such as the RBA's daily rates, Bloomberg or Yahoo Finance.

2. Note the rate your provider quoted at checkout.

3. Calculate the markup: (mid-market rate − provider quote) ÷ mid-market rate × 100.

For example, if the mid-market AUD/USD rate is 0.6650 and your bank quotes 0.6390, the markup is (0.6650 − 0.6390) ÷ 0.6650 × 100 = 3.91%. On a US$10,000 invoice, that's roughly A$611 in hidden cost. Read more on how to calculate an FX rate.

Why businesses use Airwallex for FX and transfers

Knowing what a fair margin looks like is one thing. Getting it — without juggling a separate bank for receiving funds, a converter for FX, and another provider for payouts — is another. Airwallex brings global accounts, FX conversion and international transfers into one platform, built to move your money faster and cheaper than the banks you're comparing us against.

• Bypass SWIFT and leverage local rails: Traditional transfers crawl through multiple correspondent banks before they land. We route 94% of transactions through local rails instead of SWIFT, which is why over 90% arrive the same day, and 45% arrive instantly.

• Save up to 80% on FX: Access 90+ currencies at rates built directly on the interbank benchmark through our FX Engine, and save up to 80% on FX fees compared to traditional providers.

• Operate and get paid like a local, globally: Send payouts to 200+ countries, with 120+ of them covered by local rails, so suppliers and contractors get paid in their own currency without a correspondent bank taking a cut along the way.

• Local accounts in 20+ currencies: You can open local foreign currency accounts in 20+ currencies and accept payments from 70+ countries, avoiding forced conversions when dealing with global suppliers and customers. 

Frequently asked questions

Why don't traditional banks offer the real interbank rate to retail customers?

Banks carry high cost structures – branch networks, legacy IT systems, and regulatory overheads – and use FX conversion as a secondary revenue source. Limited price transparency in retail markets means most customers don't compare rates before transacting.

What is a reasonable FX margin for an Australian business to pay?

Below 1% is competitive. For major, liquid currencies like USD, GBP and EUR, expect a margin of around 0.50%. Anything above 1.50% is worth challenging.

How often does the interbank exchange rate change?

Continuously – often several times a second during market hours. It moves with supply and demand, economic data releases, interest rate decisions, and geopolitical developments.

Does a "fee-free" transfer mean I'm getting the interbank rate?

No. "Fee-free" or "$0 commission" usually means the flat transaction fee is waived – not that the margin is. Providers typically build a margin into the exchange rate instead, so the cost is still there; it's just hidden in the rate rather than shown as a fee.

Do fintech providers use the interbank rate for every currency?

Most use it as their pricing baseline, but the margin on top varies with liquidity. Major currencies (USD, GBP, EUR) usually carry the lowest margins; minor or exotic currencies cost more to clear and carry a higher markup.

Sources

1. https://www.accc.gov.au/about-us/publications/transparency-and-competition-in-international-money-transfer-services 

2. https://www.rba.gov.au/statistics/frequency/exchange-rates.html 

3. https://www.anz.com.au/personal/travel-international/international-payments/ 

4. https://www.westpac.com.au/business-banking/international-trade/international-payments/ 

5. https://www.commbank.com.au/business/international-business-payments/international-money-transfer.html 

6. https://www.nab.com.au/business/international-and-foreign-exchange/international-money-transfers