SMEs are being charged £4billion in hidden international transfer changes every year, according to a new study.
It found that 96 per cent of a bank’s revenue for a European transaction of £75,000 is hidden in costs they add to the exchange rate, and as a result, the SME will never see it. In total, this equates to almost £4billion a year.
Spreading the charge
The amount that banks add to an exchange rate is known as ‘spread’, and it comprises the majority of what banks charge SMEs on an international transaction.
The average transaction fee for a transfer of £75,000 is 2.43 per cent – £1,822. According to the study, £1,807 of this is spread. This charge is in addition to the upfront fees banks claim on transfers.
Transparency was found to be an issue when it comes to SMEs making international transfers. The study revealed that in some cases, the customer is not aware of the charges they have paid until after the payment has been made.
Money Maker CEO Hamish Anderson said: “When it comes to international payments, it’s clear that the UK’s major banks are overcharging and underserving their SME customers.
“The UK’s banks are collectively failing to give SMEs the knowledge, transparency and visibility which they need to make an intelligent and informed decision.
“This lack of transparency is not only unfair and uncompetitive, it’s also costing the UK’s SMEs precious cash in unnecessary fees.”
The study was conducted by payments consultancy Accourt on Money Mover’s behalf. Read the full report here.