Small and Medium-sized Enterprises (SMEs) in the UK have been paying over the odds for international exports due to unnecessary fees for cross-border transactions, according to new research.
The research by Covercy revealed that traditional banks have control over 95% of the business payments market and SMEs can overpay £55 for each transaction of £1,000.
The international payments service company also found that for each transaction of £10,000, SMEs pay over £106 in needless fees and for transactions of £30,000, businesses pay more than £220 in unnecessary charges.
With over two-thirds of SME exporters making at least 20 transactions a month, paying extra for these can soon add up, as one company making 20 transactions of £30,000 could overpay an average of £4,400 monthly or £52,800 a year.
For a company making 20 transactions of £10,000 this equates to £2,120 a month or £25,440 a year, whilst a firm conducting 20 transactions of £1,000 this will total £1,100 a month or £13,200 a year
Meanwhile, importers have also been hit with unprecedented slides in the value of sterling due to Brexit while also facing these needless cross-border fees.
Doron Cohen, CEO, Covercy, said:“Brexit has brought huge uncertainty to UK SMEs, with 96% of exporters selling to the European Union. Now with the threat of being locked out of the single market, these exporters potentially face new, costly taxes which could make them much less competitive than their EU rivals.
“Meanwhile, SME importers have already suffered a critical 18% rise in their costs in less than a year due to the fluctuation in sterling’s value”.
However, companies are seeking to change this unfair situation by saving UK SMEs up to 80% on international transfers by not charging intermediary charges, which can amount to £40 per transaction and also offering lower currency exchange rates of 0.5% - 0.75% versus traditional banks’ rates of 3% - 6%.
The transactions can be completed within 24 hours, quicker than traditional banks.
Mr Cohen added: “This means the UK’s SME exporters and importers have to look for savings wherever they can find them. Unfortunately for years, banks have held SMEs hostage with over-the-top and unnecessary transaction fees for cross-border transactions.”
“With Brexit now a reality, this stranglehold, whereby 95% of the business payments market is controlled by bank needs to be broken. The current situation is stifling the growth of SMEs in Britain at a time, when they need to be able to expand to survive and thrive.”