Which exchange rate is fair when friends split in two currencies?

When I first wrote down how kisir should handle foreign currency, the hard part was not the maths. Converting 240 dollars into euros is one multiplication. The hard part was this: which number do you multiply by?

There are two honest answers, and they are not the same. This post is about how we chose, and about one thing we deliberately did not build. For the practical method, with card fees and cash, see the multiple currencies guide.

Two rates, both real

The first is the mid-market rate. It is the rate you see on a central bank site or in a currency app, halfway between what banks buy and sell at. It is the same for everyone on a given day, and anyone can look it up.

The second is the rate your bank actually charged. It shows on the statement a day or two after the payment clears, and it is usually a little worse than the mid rate, because the bank takes a margin. Some cards add a fee on top.

Neither is wrong. They answer different questions. The mid rate says what a dollar is worth. The statement says what this payment actually cost the person who made it.

What it costs when you pick the wrong one

Say three flatmates, Ana, Leo and Mia, keep their books in euros. Ana pays a $240.00 dinner for all three with her card.

• At the mid rate of 0.9200, the dinner is €220.80. Each share is €73.60.
• Ana’s bank charged €226.20, a rate of 0.9425. Each share at that rate is €75.40.

If the group uses the mid rate, Leo and Mia each owe Ana €73.60, so she is owed €147.20. At the rate her bank charged, each owes €75.40 and she is owed €150.80. The mid rate leaves her €3.60 short on one dinner. The bank took €5.40 in all, and a third of that, €1.80, is her own share to carry. The other €3.60 belongs to Leo and Mia.

Over a week of one person paying with one card, those small gaps add up to real money. And the person who puts the most on their card is always the one who loses the most.

What kisir does

When you add an expense in another currency, kisir fills in today’s rate and converts to the group’s currency. That is a mid-market rate, one daily figure for each currency, so everyone in the group sees the same suggestion.

Then it stays out of the way. The rate is a suggestion, not a verdict. The payer can change it to what their bank charged, and once someone has typed their own rate, nothing later overwrites it. If you edit an old expense without touching its currency, it keeps the rate it was saved with, because that is the rate it was converted at.

If kisir can’t get today’s rate, say because the rate service is down, it tells you so and you enter the rate yourself. The screen works the same way it would have without the feature.

So the habit we suggest is the one in the guide: add the expense on the spot with the suggested rate, and fix it when the statement arrives, if it is different.

Why the ledger shows both amounts

Every foreign expense in kisir shows two figures: the amount that was paid, and the amount in the group’s currency. For our dinner, that is $240.00 and €226.20.

I care about this more than about the rate itself. A converted number with no source is exactly the kind of thing that starts an argument on the last night. “Where does €226.20 come from?” With both figures visible, anyone can open their own currency app, or just ask Ana for her statement, and check.

It also means a mistake is visible. A rate typed with a slipped decimal point looks wrong next to the original amount, and someone notices. Each expense also keeps a history of who changed what, so a change of rate is not silent either.

The thing we decided not to build

Here is the idea we turned down. If bank rates are always a little worse than the mid rate, why not build in a margin? Fill in the mid rate plus a typical spread, so the suggestion lands closer to what people really paid.

It sounds helpful. We looked at it, and I decided against it, for three reasons.

There is no typical spread. Every bank takes a different margin. Cards differ. Some add a fee, some don’t, and some only charge it at weekends. Whatever number we picked would be too high for one person’s bank, too low for another’s, and right for almost nobody. A wrong rate that looks precise is worse than an honest one that looks rough.

It would put a hidden number in your ledger. The mid rate is something anyone can check against a central bank. A mid rate plus our guess at a margin is a number no one can check, and it would not match what any bank, or any statement, says.

The payer already has the right answer. The only person who knows what the bank charged is the person who paid. So the app suggests a rate everyone can verify, and hands the final word to the one person who has the real figure. That keeps the app out of a question it can’t answer.

A suggestion that matches the central bank and can be edited seemed more honest than a smarter-looking guess. So the suggested rate stays the mid rate.

What this means for your group

You don’t need an app to apply this, only to agree on it:

1. Keep one group currency, usually the one most people have at home.
2. Enter each expense in the currency it was paid in.
3. Use the day’s mid rate as a placeholder, and let the payer replace it with the rate on their statement.
4. Keep both amounts visible, so any number can be checked.
5. If a card fee was charged for a shared purchase, it is a shared cost. Fold it into the rate.

The group trip guide covers the rest, including who counts as part of each expense.

The fair rate, in the end, is the one the person who paid can prove. Everything else is a place to start from.