How does Liquid determine the exchange rate for foreign currencies?

Understanding Exchange Rates on LiquidTrust

When you're dealing with foreign currency transactions on LiquidTrust, you might notice that the exchange rate we display is slightly different from the "mid-market" rate you see on Google, Reuters, or other public currency exchange websites. This article explains why that difference exists and how LiquidTrust's rates work.

What is the "Mid-Market Rate"?

The mid-market rate (also known as the interbank rate) is the true midpoint between the buying and selling prices of a currency. It's often considered the "real" exchange rate, but it's typically only accessible to large financial institutions trading vast sums of money directly with each other. It's a theoretical rate, not usually available for individual or business transactions.

Why is LiquidTrust's Exchange Rate Different?

At LiquidTrust, the exchange rate you see reflects the actual cost of converting currencies through our network of banking partners and payment processors. Here's why this rate will naturally differ from the mid-market rate:

1. Real-World Costs: Converting currencies isn't free. Banks, payment processors, and currency exchange merchants (like LiquidTrust's partners) incur costs for facilitating these conversions. These costs include operational expenses, risk management, and the overhead involved in providing the service. Our exchange rate incorporates these necessary costs, allowing us to offer you a reliable and secure conversion service.
2. Market Realities: The mid-market rate is a reference point, not a transactional rate. In the real world, no one can buy or sell currency at this exact rate for a standard transaction. Every financial institution that facilitates currency exchange will add a small margin to this rate to cover their costs and provide their service.
3. Competitive Rates: We work diligently with our banking and payment partners to ensure that the exchange rates we offer are highly competitive within the market. Our rates are designed to be transparent and provide great value compared to traditional banks and other payment providers.
4. Daily Updates: The exchange rates on LiquidTrust are updated daily to reflect real-time market changes. This ensures that the rate you see is current and accurately reflects the cost of conversion at that moment.

What This Means for Your Transactions:

When you perform a foreign currency transaction on LiquidTrust, the rate you see is the rate you'll get for that transaction. We aim for full transparency, so there are no hidden fees within the exchange rate itself beyond what is displayed. Any additional transaction fees (e.g., our service fees) are always shown separately.