Fintechs call on UK government to put an end to hidden fees in cross-border payments
A group of 15 fintechs including Wise, Monzo, Revolut and Klarna have penned an open letter to UK chancellor Jeremy Hunt urging the government to “stop hidden fees in cross-border payments once and for all”.
The open letter is signed by 15 fintechs including Wise, Monzo, Revolut and Klarna
The letter says that there is currently “widespread practice of firms showing currency conversion services as have ‘zero fees’ or ‘0% commission’”, but claims this is “highly misleading when a much larger charge is embedded in the exchange rate, ranging from 2.5% – 3.7% over the mid-market rate for a transfer to EUR or USD with a UK high-street bank”.
It adds that this charge is “never communicated to the customer” and has led to consumers and small to medium-sized enterprises (SMEs) in the UK losing “a total of £5.6 billion in mostly hidden FX fees in 2022 alone”. In addition, it says the current rules also mean that “UK customers are not able to accurately calculate the total cost of their transaction or compare costs”.
The group has now urged the government to address the issue in the ongoing Payment Services Regulations (PSRs) Review and “utilise its post-Brexit freedoms to take a leading role on the global stage, becoming the first country to power savings for consumers sending money abroad or businesses trading internationally through transparency”.
The letter goes on to outline proposed steps the government must take to fix the issue, which include making sure the total cost of currency conversions is shown to consumers and businesses up front, “including any mark-up or margin over the mid-market exchange rate”, and mandating companies to use an aggregated mid-market rate issued by an FCA-approved neutral provider.
It adds that HM Treasury should also instruct the FCA to “issue guidance on what constitutes a ‘currency conversion charge’” and “issue updated guidance in the Consumer Duty with a clear example box of how it expects firms to behave when it comes to currency conversion services”.
“It is important that customers know exactly what they are paying. These revisions to the PSRs and FCA guidance will ensure that these fees are shown upfront to consumers before they part with their money,” the letter says, concluding that the government “must address this immediately to save consumers and SMEs billions”.
