The high charges are also holding them back from hiring new staff, and cutting the price of their goods and services, according to research
Hidden banking fees are preventing small businesses from hiring more staff, cutting the price of their goods and services – and expanding into new, international markets.
Nearly seven in 10 small business (SMB) owners (69%) feel they have been held back from expanding their enterprise, as a result of complex international payments.
This is not helped by a “corporate opt out”, which makes it easy for banks to rip off British businesses by hiding their fees in exchange rates – as they are not obligated to apply existing payments transparency rules when it comes to businesses.
Unfortunately, this makes it harder for business owners to compare the market – and ended up costing British SMBs a whopping £2.8bn last year alone. This also impacts customers – with this figure rising to £4.4bn lost to these hidden fees, once consumers were factored in.
It is perhaps no surprise that the 3,000 business owners polled feel they struggle more with these banking fees (26%), than they do with Brexit red tape, such as tariffs (19%) or supply chain issues (22%).
As a result, international account provider, Wise, is calling on the government to End the Opt Out through a petition, and for regulation to then be further tightened to ban hidden fees for businesses and consumers.
Steph McGovern, TV presenter, host of The Rest is Money podcast, and small business owner of “Gootopia”, who is backing the campaign, said: “As a small business owner myself, I know that operating in the current climate is tough.
“The fact that businesses are being ripped off when it comes to international payments is not only bad for them – but it’s bad for consumers and the economy. That money could cut prices, create jobs, be kept safe for rainy days, or deliver investment.
“Our business is operating across various cities in the UK, so we know that this is a problem for businesses up and down the country.
“There are so many things that can be done to aid SMB growth. Ending the opt out, and improving legislation to ban hidden fees, is a simple, cost-free way of helping the country’s small businesses. Sign the petition now.”
Further research of 1,500 SMBs found that, if the cost of international banking services were to be reduced, more than a third (34%) would enter new markets, including the EU (58%), North America (41%), and the Middle East (31%).
Just over a quarter (27%) would hire more staff, and 21% would reduce the price of their goods and services.
Two-thirds (66%) of SMBs surveyed agreed that the opt out should be removed, and the majority (82%) said that regulation should encourage banks to be transparent about international payment costs.
Magali Van Bulck, head of EMEA policy at Wise, said: “For too long, financial providers have been charging grossly unfair fees and inflated exchange rates.
“This needs to end now – and the Government can do so without costing the taxpayer a penny. Everyone loses out to hidden fees, but the problem is most acute for SMBs.
“Existing legislation is weak and patchy, but it doesn’t even apply to SMBs due to a corporate opt-out. This drives up costs, dims competition, and costs SMBs money, growth, and opportunity. It’s time to end the opt out, tighten legislation – and put a stop to hidden fees once and for all.”
