The interbank rate is the exchange rate banks trade at with each other, and it serves as the benchmark against which any markup abroad is measured.
The interbank rate is the exchange rate banks trade at with each other, and it serves as the benchmark against which any markup abroad is measured.
Also called: Mid-market rate, Reference rate.
How it works#
Card networks convert close to this rate because they earn nothing from conversion itself, and they publish their rates daily. Any provider quoting something else is earning the difference. The rate is therefore the only meaningful comparison: without it, an amount shown on a terminal cannot be judged as cheap or expensive at all.
Not to be confused with#
The interbank rate is not the rate travellers actually receive: conversion markups and card fees are applied on top, depending on the card and the payment route chosen.
In German#
The German term is Interbankenkurs. German version of this term
Related terms#
- Dynamic currency conversion: Dynamic currency conversion is the offer to settle a payment abroad in your own home currency, with the merchant side choosing the exchange rate.
- Foreign transaction fee: A foreign transaction fee is a percentage charge added by the card issuer on purchases that are not in the card’s billing currency.
- Cash advance: A cash advance is withdrawing cash on a credit card, which counts as borrowing and therefore carries its own fees and interest rules.
Articles that use this term#
TopicEvery article and term onCards and money.