Hidden foreign exchange charges cost SMEs dearly
Posted on 31st July 2018 by Jamie Holmes - Director at CurrencyWave
If your SME business is involved in buying materials or services from overseas or exports products to other parts of the world, it has never been easier to trade on the global stage. The rise of digital communications and industries has led to a huge increase in global commerce for smaller businesses in recent years. However, when it comes to international payments, you may find your business is being held back by expensive foreign exchange services offered by banks who are more geared towards serving their larger corporate customers.
Bank’s hidden charges
Small and medium sized businesses are unknowingly paying over the odds for their foreign exchange (FX) services and are unware that they could be paying hidden fees of around 2.5% to 5% every time they instruct their bank to convert currency and send a payment. This could equate to a charge of up to £2,500 for converting £50,000 of currency.
Rather than openly displaying these fees to their customers, banks hide these charges within uncompetitive exchange rates. With around 85% of small firms using their bank to do FX transactions, the resultant fees are estimated to cost them some £4bn per year in additional and unnecessary charges.
Levelling the playing field
Large multinational companies, due to their size and closely managed banking relationships, obtain much more favourable currency exchange rates than SMEs. But is it fair that they should be subsidised by smaller customers?
“Expensive foreign exchange charges are an unnecessary burden on smaller companies, especially those operating on tight margins, but the good news is that they now have more options to deal with this side of their business” says Jamie Holmes of CurrencyWave.
CurrencyWave is a digital business that leverages technology to reduce the complexity and cost of international payments for small and medium sized businesses as well as for individuals.
“It is our mission to level the playing field in foreign exchange and offer access to market leading exchange rates whilst at the same time providing a superior customer experience throughout the whole payment process.”
Reasons why small and medium sized businesses use CurrencyWave:
- Save up to 85% on the charges hidden within foreign exchange rates offered by banks for converting international payments/receipts.
- Unlock currency exchange rates that are generally only available to large multinational corporations.
- 24/7 access to the payments platform gives you the flexibility to arrange currency payments whenever and from wherever you are.
- The payment platform handles over £12bn in international payments per year and 20,000 individual payments every day.
- The Payments Engine supports your worldwide growth ambitions with over 30 currencies and 212 country destinations available.
- We can help you remove currency risk and protect profits in your business by undertaking forward currency transactions to lock in exchange rates for up to 1 year ahead.
- The platform automatically displays the real-time interbank rate alongside the rates we quote so you have much greater transparency.
- Unlike other FX providers, we do not offer ‘honeymoon’ exchange rates just to attract new customers only to increase our spreads later. Our charges remain constant at all times.
- Our systems are robust and secure, and the payment platform is authorised and regulated by the Financial Conduct Authority (FCA). All client funds are held in a segregated bank account with Barclays plc.
CurrencyWave can be contacted on 0113 451 0180 or by email at firstname.lastname@example.org.
The information in this article has not been written by Caunce O’Hara & Co Ltd or any of Caunce O’Hara’s employees. None of the opinions or views contained within this article are Caunce O’Hara’s nor do we accept responsibility for any financial advice given within the article.
Caunce O’Hara & Co Ltd do not provide Tax advice nor advice regarding Investments. Any commitments are taken solely at the person’s own discretion.
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