Nobody can transact at the mid-market rate (average of the best bid and best offer). It is a theoretical metric derived from the order book (or at least the portion of the global order book visible to you at the time of calculation - unlike stocks there is no requirement for quotes to be made publicly available). Yes, your bank is making a spread off you but no, not receiving the mid-market rate is not evidence of being screwed.
I wouldn't agree. Obviously, there needs to be a spread, but receiving a 1.23 rate when it should be around 1.29 is getting screwed. That's higher than 5% when there is no reason for it to be.
Banks can set a fixed daily rate or a yearly one, it is their arbitrary decision. And obviously, they set it this way because it gives them a nice profit and they can get away with it.
Living abroad, I have transferred money in many occasions, and any FX broker will set their exchange rate on the spot or at most up to a minute basis. In this case, it would mean having a spread such as 1.288-1.292 (and probably tighter) instead of the one quoted by the traditional bank.
I was outraged when I discovered the FX GlobalTransfer service offered by Oanda and learnt that my bank had been overcharging hundreds of $.
Any tips on how I could be saving in this situation?
My service Candy Japan gets most of its money via PayPal in USD. I have to convert this to EUR to get it to my Finnish bank account. Then from the Finnish bank account I need to transfer it to my Japanese bank account to actually be able to buy the product and pay for shipping here. Neither accepts PayPal or debit card directly.
I created my PayPal account when I was still living in Finland, so it doesn't offer me the option to withdraw directly to Japan.
The cash market spread is usually something like 4-6 basis points for major pairs (i.e. 0.04%), even accounting for the fictitious mid rate, you still have orders of magnitude difference from the retail spreads. Thomas Cook, a major UK travel agent, is currently offering around 6% for GBPUSD going by their web site.
