The U.K. has taken up the task of improving the banking experience for small and medium-sized enterprises. Largely, that involves embracing the introduction of new lenders into the market, be it through challenger banks or alternative lending platforms.
But new research from foreign exchange payments platform Money Mover and payments sector consultancy firm Accourt reveals another area in which mainstream financial institutions seem to be falling short with their SME customers: cross-border payments.
Analysis revealed that SMEs in the U.K. are spending nearly $5.8 billion in hidden fees to their banks for cross-border payments across the Eurozone, reports said Monday (Jan. 11). The research pointed to the Big Four banks — Lloyds, RBS, Barclays and HSBC — and their lack of transparency in their fee structures for payment transfers to the euro for smaller companies.
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“When comparing costs among banks, there is no straightforward way of deciding which one is the most expensive,” the report concluded.
Indeed, that lack of transparency made it difficult for researchers to uncover the exact fee rates for small businesses that need payments sent to and from the Eurozone, researchers said.
Accourt said the report could not offer “definitive conclusions” on which Big Four bank was most expensive for SMEs when it comes to cross-border payments because of this lack in transparency, as well as volatility in the foreign exchange market.
However, the report found that, on average, banks charge about 2.43 percent of the total transaction volume to SMEs making payments in euros, equating to £3.96 billion ($5.7 billion) charged by the banks every year.
One spokesperson for Barclays told reporters that the bank “wholeheartedly” disagrees with the findings from the report. “They are not an accurate reflection of the rates offered under a comparison scenario, and we would challenge the robustness of the methodology,” the spokesperson added.