BRUSSELS: More than £2bn could have been saved in costly transaction fees on non-EU international payments last year, according to a report.
Business owners are losing out because they aren’t comparing bank rates and are not aware of other companies specialising in money transfers that offer cheaper rates, according to transfer comparison website FXcompared.
UK companies exporting goods outside the EU needlessly incurred upwards of £670m in direct currency-related transaction costs in 2014, the report estimates. For UK importers sourcing goods from non-EU countries, the amount rises to more than £1.6bn. Combined, these extra fees add up to a total of around £2.3bn a year.
“Smaller businesses, especially those in specialist sectors, often do not have the scale and capacity to manage their international transactions and currency risk effectively, and they are often not well served by their banks,” said Jonathan Hyman, chief economist at FXcompared.
“This significantly adds to the cost of doing business with customers and suppliers outside the UK.” According to the latest Annual Business Survey from the Office for National Statistics, 16pc of all UK businesses traded internationally in 2013, including imports and exports.
The United States is the UK’s largest trading partner after the EU, with British firms importing and exporting £71.7bn of goods to the US in 2013.
China is the third-biggest foreign market, although trade flows are dominated by Chinese imports. The UK imported £33.9bn worth of goods from China the year before last. The Asian powerhouse is the UK’s seventh largest export market.
London-based TransferWise is one of the UK’s best-known online money transfer firms and is now valued at $1bn. The company, led by Estonian entrepreneurs Taavet Hinrikus and Kristo Käärmann, claims to be 89pc cheaper than banks. It secured a $58m (£39m) investment earlier this year led by Andreessen Horowitz, the California-based venture capital firm.