Caxton FX, a firm that specializes in foreign exchange and international markets, has released some concerning information for UK businesses. According to their recent study, charges from banks conducting overseas transactions are costing businesses in the UK £356 million a year. Once again, Santander, Barclays, and the other big banks are some of the big offenders.
Some transactions are costing banks upwards of £40 each. Even the average fee of £21.40 is more than most local businesses can handle.
Once again, Barclays is charging its customers the highest fees. Barclays customers are forced to pay £25 for a single transaction but may be required to pay up to £40 if they want to expedite it. The other banks that charge significant fees are requiring a little less than £30 for an express transfer.
These fees are putting significant pressure on the banks. However, they are not the end of the story. Businesses are also required to pay the exchanges fees of the host country they are working with, which can be significant for many countries.
According to Caxton, the average business makes nearly 40 transactions each year. These transactions cost the banks nearly £800 annually. According to a spokesperson for Caxton, these fees are an extreme burden for UK businesses, but they feel powerless against changing them.
One of the concerns is the oligopoly stronghold the big banks have over their customers. Some critics would almost describe their unity as a form of price-fixing, but they feel powerless in their ability to change the bank’s fee structure.
Since it is not a member of the Eurozone, Britain is excluded from the Single Euro Payment Area (SEPA). Essentially, this means that Europe doesn’t have to worry about being charged for a number of the fees that are traditionally charged to account holders, even though the transactions are conducted as if Britain was a member of the Eurozone.
Although many businesses feel that the fees they are being charged are inevitable, they need to be reminded that there are other options, says James Hickman of Caxton. Businesses can reduce the impact these fees have on their bottom line by looking towards other banks instead.
There are more options available to large multi-national companies than too small businesses. However, small businesses can also join providers that take a more liberal approach to banking and do not charge the same fees as the major UK institutions such as Barclays.