Wise, the global technology company building the best way to move money around the world, has today released new research showing that banks took £3.6bn in often hidden FX fees from small- and medium-sized businesses (SMBs) in 2022 alone. 

Detailed in a new report, The Cost of Going Global: How are banks stifling dreams of overseas growth for UK SMBs?, the research finds that SMBs last year lost £3.6bn in FX fees when selling goods and services overseas, with all UK businesses losing £4.2bn. The report details the scale of the problem for SMBs, which is compounded by exchange rate volatility and banks often hiding their fees. 

While banks often profess their love for SMBs, their use of hidden and high fees suggests a one-sided relationship. So, Wise is asking banks to treat SMBs better this Valentine’s Day by showing their markups and, ideally, reducing their fees. 

And, if they don’t act, Wise is also calling on the Government to tighten existing regulations to make fees clearer and the market more competitive, giving SMBs the knowledge they need to decide whether to stick with their bank, or swipe left and find a new partner. 

Existing legislation should force banks to disclose their fees, but is currently falling short. The Cross Border Payment Regulation 2 (CBPR2) rules state that banks should make clear fees when business customers trade in Euros. However, the regulation is often ignored or circumvented by banks through hiding fees in marked-up exchange rates. 

The situation is even worse for businesses trading overseas outside the EU. The Payments Services Regulations (PSRs), currently under review, are clear in their aim to achieve greater transparency, but because the language is vague, they provide very weak protections for transparency across international banking services. 

Worse, the PSRs allow banks a ‘corporate opt out’ when dealing with business customers, meaning that already weak legislation deliberately excludes SMBs. 

Wise is therefore asking the Financial Conduct Authority (FCA) to:

• Better enforce CBPR rules and provide additional guidance to banks so their intention to ban hidden fees rules is respected

• Ensure that, as part of its PSR review, all payments overseas are subject to transparency, with banks forced to make fees clear

• End the ‘corporate opt out’, which penalises SMBs for no good reason

The report also finds that banks’ poor services are leading to SMBs staying at home. Almost a quarter (24%) of SMBs have been put off from expanding abroad by the cost and inconvenience of banks’ international services, making it a more significant deterrent than inflation (22%), regulation (21%), energy costs (20%) and supply chain disruption (19%).*

Harsh Sinha, Chief Technology Officer, Wise, said:

“Each week, there seems to be a new marketing campaign from a big bank claiming their love for SMBs. And yet - the best relationships are marked by honesty and trust. It’s wrong that banks feel able to charge SMBs such high fees and worse than they believe these fees should be hidden. It’s time for banks to come clean about their fees. 

“Expecting banks to change might be a romantic idea, but tighter regulation should not be. The Government - at no cost to the taxpayer - could improve and enforce existing regulation to give SMBs the power to know how much they’re being charged, and where they can get a better deal.

“Transparency would, at least, give SMBs the information they need to decide whether their bank is the right partner - or if they’re just not that into them.”

Wise believes strong relationships have trust and honesty at its core. Hence we never markup exchange rates and always show our fees transparently. This allows customers to make an informed choice and know what they are getting into. 

Wise is committed to helping SMBs find the best opportunities to grow their business locally and abroad. Wise Business allows businesses to pay employees and suppliers, get paid and manage cash flow overseas all in one place, and all while benefiting from Wise’s speed, transparency, convenience and low costs.

Today, Wise Business has more than 400,000 active customers.