International Payment Concerns Stop SMEs from Expanding Overseas

Payments
24.01.2024 11:55 am

Currencycloud, the experts at simplifying business in a multi-currency world, has released new research showing that concerns around international payments are a leading barrier stopping UK small and medium enterprises (SMEs) from exporting overseas.1

The research, which surveyed 500 decision makers at UK SMEs, found that more than a quarter (28%) of businesses not already exporting overseas have plans to do so in the future but concerns around international payments are preventing them from taking the plunge.

Payment problems

Many businesses surveyed find starting to trade internationally daunting – citing everything from worries about finding overseas customers (31%) to concerns about tariffs and other charges (29%) when explaining why they hadn’t yet exported. However, over a third (34%) of businesses currently not exporting said that they choose not to do so due to worries about the complexity of making and receiving international payments. This made payments the third most commonly cited answer.

Within this group, over half (51%) say that they are concerned about being exposed to currency fluctuations and foreign exchange risk. Additionally, 49% of businesses are concerned about payment security and 45% are worried about the speed of payments. Another 43% cited the cost of making and receiving payments as being a key barrier.2

Interestingly, of the 51% of SMEs surveyed who are already exporting, whilst a third (33%) still find international payments a challenge, they are less of a problem than dealing with tariffs (45%) or, customs and red tape (43%). This suggests that businesses that are not yet exporting are underestimating the very real challenges that navigating customs and tariffs can bring.

Pathway to growth

With 49% of small businesses not yet exporting, there’s potentially considerable revenue to be unlocked for providers who can alleviate their concerns and help them overcome perceived payment barriers.

Interestingly high street banks may be in a prime position to do exactly this. Almost half (46%) of those SMEs already exporting surveyed use their high street bank or building society to send and receive payments, and over a third (34%) of all respondents have tried to access support with exporting from their banks. This was second only to the government / Department for Business & Trade.

Currencycloud’s Head of Product, Piers Marais, commented: “These figures show that international payments are a key concern for businesses looking to export overseas. However, it’s also clear that there’s a growing appetite to export and that banks are in a key position to support SMEs.

“So, we need to move away from the standard ‘banks vs fintechs’ rhetoric and focus more on how the industry can collaborate. It's also clear that if the Government wants to boost Britain's global business ambitions, it needs to take concerns around red tape, customs, and tariffs seriously".