Fintechs Seek An End To Undeclared Bank Fees In Global Payments
Wise, Revolut, and Monzo are just a few of the fifteen largest fintech businesses in London that have banded together to call for an immediate revision of the law governing hidden bank costs for foreign transfers.
The fifteen signatories of an open letter to the Chancellor Jeremy Hunt assert that consumers and SMEs in the UK lost a total of £5.6 billion in 2022 due to primarily undisclosed foreign currency fees, and that confusing present law permits major providers to continue making money through these hidden fees.
According to the letter, it is a common practice for businesses to advertise that their currency conversion services have “zero fees” or “0% commission.”
“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 highstreet bank, but this is never communicated to the customer.”
In the letter, the Chancellor is urged to take up the matter during the current review of the Payment Services Regulation. Along with Truelayer, Teya, PayPlan, Seedrs, NCFX, Fairer Finance, Startup Coalition, GoCardless, SumUp, Fire, and Plum, the fintechs behind the plea have outlined the following five demands:
Before consumers and SMEs make a payment, the complete cost of currency conversions must be disclosed upfront.
Any mark-up above the mid-market rate should be included in the legal definition of a “currency conversion charge.”
Companies must use an aggregated mid-market rate published by a neutral supplier (such as Bloomberg, Refinitiv, or New Change FX) that has received Financial Conduct Authority (FCA) approval as a recognized source of mid-market rates.
In order to support Global Britain, these regulations must apply to all currency conversions, not only those involving EU currencies.
The letter also outlines how the Treasury can assist the FCA in deleting ambiguous language and making sure that all businesses are aware of the standards they must follow.
Wise’s head of Emea policy, Magali Van Bulck, stated:
“Hidden fees in foreign transactions simply shouldn’t exist in 2023. Burying additional costs in inflated exchange rates and labelling these as ‘zero fee’ is having a detrimental effect on the finances of people and businesses across the UK. In light of the Consumer Duty coming into force at the end of the month, this is completely unacceptable and a textbook example of how firms are not “providing fair value to customers.”
