UK small and medium-sized businesses (SMBs) lost a whopping £2.8billion in hidden international banking fees last year, according to Wise, the international money transfer company.
This substantial loss is deterring a significant portion of SMBs from venturing into new markets, with over a quarter citing the exorbitant cost of international banking services as a major obstacle.
The complexity and opacity surrounding international payments further exacerbate the situation, says Wise, hindering the expansion plans of 69 per cent of SMBs surveyed.
Moreover, existing regulations inadequately address the issue, with a corporate opt-out loophole enabling banks to conceal fees within exchange rates, resulting in considerable financial detriment to SMBs. This loophole allows financial providers to avoid applying any level of transparency to SMBs’ international payments, leaving them vulnerable to hidden charges.
Wise is spearheading a campaign urging the government to abolish this opt-out and implement tighter regulations to eradicate hidden fees, thereby fostering a more competitive environment and facilitating SMB growth nationwide. It has launched an End the Opt Out petition online.
‘Weak’ legislation
Magali Van Bulck, head of EMEA Policy at Wise, said: “For too long, financial providers have been charging grossly unfair fees and inflated exchange rates. This needs to end now, and the Government can do so without costing the taxpayer a penny. Everyone loses out to hidden fees, but the problem is most acute for SMBs.
“Existing legislation is weak and patchy, but it doesn’t even apply to SMBs due to a corporate opt out. This drives up costs, dims competition and costs SMBs money, growth and opportunity. It’s time to end the opt out, tighten legislation – and put a stop to hidden fees once and for all.”
Backing the campaign
TV presenter Steph McGovern has thrown her support behind the campaign and, in her The Rest is Money podcast, she will address how SMBs can expand internationally.
She said: “As a small business owner myself, I know that operating in the current climate is tough. The fact that businesses are being ripped off when it comes to international payments is not only bad for them – but it’s bad for consumers and the economy. That money could cut prices, create jobs, be kept safe for rainy days or deliver investment
“Our business is operating across various cities in the UK, so we know that this is a problem for businesses up and down the country. There are so many things that can be done to aid SMB growth. Ending the opt out, and improving legislation to ban hidden fees, is a simple, cost-free way of helping the country’s small businesses. Sign the petition now.”
