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The hidden costs of foreign currency exchange for UK businesses

In a globalised economy, being able to make and receive payments in international currencies is critical for businesses of all sizes, including start-ups and SMEs. Yet the costs of doing so can be substantial, and small businesses are disproportionately affected.

High upfront fees for making international payments are just part of the problem. More insidiously, costs are hidden and absorbed in the exchange rates offered, making it difficult for small businesses to understand exactly how much they are being charged.

Studies have found total spreads of up to 3.71%, including fixed fees, and as a result it has been suggested that the UK’s small businesses hand over around £4 billion to the major banks every year, simply in order to buy goods and services abroad. To make matters worse, large organisations are then actually offered favourable exchange rates. 

Transparency regarding all costs is of course critical for the CEOs of small businesses to be able to make accurate projections, whether for internal planning or external funding. Meanwhile, cost-effective international payments are critical if SMEs are to truly benefit from the global market and seek out the best international partners, suppliers and customers. They need a foreign exchange model which is clear, cost-effective and efficient.

Currency exchange costs come in other forms too. Organisations of all sizes engaged in transactions in foreign currencies are exposed to currency risk. This can have a significant impact on commercial margins, and is particularly risky for small businesses because their banks are less likely to offer currency hedging solutions.

In the aftermath of Brexit, helping CEOs to manage the costs associated with currency exchange should be a key priority for the entire financial services sector. Transparency and cost-effectiveness will help UK businesses to build fruitful relationships all over the world, to open up new markets, find new customers and suppliers and partner with the biggest innovators in their fields.



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Pierre-Antoine Dusoulier

Pierre-Antoine Dusoulier

Founder and CEO


Member since

24 Feb 2020



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