What does sending money home really cost?

What a transfer costs once the exchange rate is counted as well as the fee, and how much of the total is the part nobody quotes. It prices one transfer on the rates you enter, and both rates move during the day, and it does not model a receiving-side charge, a cash-out fee or a card funding fee, each of which is a separate line on a real transfer.

• The exchange rate took more than the fee did. The fee is the number that gets quoted; the rate is the part that does not.

236,313 arrives, and sending 5,000 cost 177: 25 of it is the fee and 152 is what the exchange rate took, on the rates as the app quotes them.

The cost is not the fee. It is everything that left your account, less what actually arrived valued back at the rate the market is trading at. Take the fee off the amount, convert what is left at the rate you were quoted, and value that result at the mid-market rate: the difference is what the transfer cost you.

Written that way, the fee falls out as a number you already knew and the exchange-rate margin is the remainder. That is the only arrangement that cannot double-count, and it is why the margin is derived rather than entered.

The margin is usually several times the fee, and it is the half nobody quotes. Dragging the amount shows the shape of that: the fee stays exactly where it is while the margin grows with every unit you send, because a spread is a percentage and a fee is not.

Where the rate you were quoted is better than the mid-market rate, the arithmetic runs the other way and the total cost lands below the fee. The row says so rather than drawing a negative part, and it is worth checking on the quote itself — it is rare enough to usually be a misreading.

cost = what you sent − what arrived, valued back at the mid-market rate

The fee is the part the service quotes. The margin is the rest of the cost, and it is the gap between the rate you were given and the rate the market is trading at.

What it assumes

• Both rates are units of the receiving currency for one unit of the sending currency, which is how transfer apps quote them. If you have them the other way round, the answer inverts.
• The mid-market rate is the reference the transfer is measured against. It is the midpoint between what the market is buying and selling at, it is what a search engine or a central bank reference shows, and it is not a rate a consumer can transact at.
• The fee is taken before conversion, which is how most services do it. A service that takes its fee on the receiving side leaves a different figure at the other end, and this does not model that arrangement.
• One transfer, at one moment. Rates move through the day, and a quote held for a few minutes is not a quote held until you press send.