In 2015 alone, British SMEs lost £4,078,000,000 in hidden fees on international business payments.
That cost has risen by almost £1 billion over the last five years as UK businesses have increased their cross border trade.
A study by independent research consultancy Capital Economics, revealed that SMEs in the UK suffer disproportionately from unfair fees on international payments - losing almost ten times more than big businesses.
It equates to every SME in the UK needlessly paying an extra £755 per year - those that make regular international payments could be losing considerably more.
The problem starts with fees that aren't immediately obvious. While up-front fees for international payments are more obvious, many banks and brokers also hide fees by using poor exchange rates.
Instead of using the mid-market rate (the one you see on Google or Reuters), they use their own rate in order to make an extra margin.
This means that SMEs are paying up to 7x more than for their international payments using their own bank than they would be using TransferWise.
SMEs simply aren't aware of how much they're losing
A separate YouGov study revealed that more than a quarter (28%) of businesses believed they were getting a good exchange rate. This belief tends to stem from them either getting the transfer for free or being charged a flat rate with a reasonable exchange rate.
19% of businesses admitted they had no idea how they were being charged.
On a more positive note, the study also showed a greater use of overseas resources has meant more success for UK SMEs. 76% of those doing business beyond the UK said that expanding internationally has increased their profitability.
How do I avoid getting overcharged?
There's one simple rule: check the exchange rate.
While you're bank may have a clear fee structure upfront, the rate they use may well be very different to the mid-market, or interbank, rate - meaning your business ends up paying the difference.
Nilan Peiris, VP Growth at TransferWise:
“Small and medium businesses are the backbone of the British economy, but too many are getting stung by their own banks. Unfair fees on international payments are harming their growth and many don’t even know it’s happening. This must end.
“All business is increasingly global so UK SMEs need a fair and transparent way to make international payments. TransferWise for Business provides SMEs with a simple platform that can save them money, open up greater opportunities abroad and help them grow.”