Banks Generate £4 Billion In Hidden Fees From S.M.E Currency Transactions
As we have been saying for some time, when it comes to currency payments and transfers, banks have always taken their customers for granted, regardless if you are buying Euros for a family holiday in Spain, or if you are a business owner, who needs to pay an invoice to the USA. Unsurprisingly, there is now even more evidence to back up our negative view of the high street banks.
A recent study has found that banks in the UK charge small and medium sized enterprises, known as SME’s, £4 billion in hidden transfer fees every year when making international payments. According to McKinsey&Co, international trade is worth over £700 billion to UK SME’s and figures from Oxford Economics show that the number of SME’s doing business in more than six countries will increase by over 120% across the next three years. It’s also important to note that half of all UK SME International trade is with Europe.
The study, carried out by payments consultancy Accourt, specifically highlights the lack of transparency by banks, with regards to the fees they charge SME’s and how these are calculated. The Research showed that 98% of revenue for an average transaction of £75,000 in the EU, comes from the margin that banks add to the exchange rate. The hidden charge is in addition to the upfront fee that banks disclose when making a transfer. Including fixed fees, the most expensive bank can make 3.7% on any transfer.
Transparency was also a key concern surrounding currency transfer services. In some cases, the SME won’t know how much they are being charged or the amount that the recipient will receive, until after the payment has been made.
These findings come as no surprise to us, and the study highlights, once again, just how badly banks take their customers for granted, providing an expensive and inadequate service.
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