Less than 20% of managing directors or owners of UK SMEs understand the charges they pay their banks for overseas money transfers, a YouGov survey has found.
A survey of 565 MDs and owners of SMEs conducted in October found that over 80% didn’t know the true cost of the transfer fees and those at small financial services firms were even less likely to guess correctly than their counterparts in other sectors. TransferWise, the company that commissioned the research, accused high street banks of hitting SMEs with hefty ‘hidden’ fees.
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Taavet Hinrikus, co-founder of TransferWise, said: "When even financial services firms don’t understand the true costs of international money transfers, what chance has the average entrepreneur got?
"The fact is the hidden foreign exchange fees charged by banks are hitting companies’ hard won margins. Six in every ten small businesses mistakenly believe their bank charges less than 4% for processing international payments. The real cost is higher than they think, and ultimately is eating away at their profits."
The survey also revealed that 43% of respondents would find foreign trade more attractive if the costs were more transparent.
Hinrikus said: "Two years ago, the Office of Fair Trading told banks to make their fees for overseas transactions easier for consumers to understand by clearly showing them all the charges that apply.
"They need to do the same for small-business owners. Banks are making it almost impossible for small businesses to understand overseas money transfer costs."
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