More than half (53%) of the medium-sized and large businesses in the UK use a bank for international payments potentially costing them more than £426 million a year in currency costs, according to foreign-exchange and treasury management specialist Centtrip.
Centtrip’s survey of 500 medium-sized and large companies has revealed that on average each spent £978,000 on international payments over the past 12 months. With UK banks charging an average of 2% for currency conversion, the 53% of all medium-size and large firms in the UK would have spent an additional £19,560 each in currency costs, or more than £426 million collectively in just one year.
However, had those businesses used an FX specialist offering an average conversion fee of 1.5% or Centtrip, which on average offers less than 1%, they could have saved as much as £213 million.
Considering there are just 41,140 medium-size and large businesses in the UK, making up 0.7% of the business population, this is likely to be just a fraction of the billions of pounds wasted on currency conversion fees by UK companies each year.
Centtrip’s research also found that many businesses are in the dark when it comes to currency conversion costs. Almost one-third (29%) believe that high-street banks offer a competitive, “mid-market” exchange rate, nearly one-quarter (24%) do not consider a broker or specialist fintech company as a cheaper alternative, while one in five (19%) believe business clients do not pay additional fees to banks for processing international payments.
Foreign exchange is a big expense for many firms that export and import goods, pay their clients and suppliers across the globe or process staff expenses from overseas business trips. Centtrip’s survey also showed that 89% of respondents have a need for foreign exchange, and this number rises to 93% among larger companies.
However, not all businesses in the UK are losing out. More than one-third (34%) of companies use an exchange house or currency broker to convert money and almost one-third (27%) use the services of a fintech company for their international payments.
Brian Jamieson, co-founder and CEO of Centtrip, said: “Businesses waste millions of pounds on currency conversion fees each year unnecessarily. Many firms either default to using their bank because they have established relationships or are unaware of better, smarter and more cost-efficient options available to them.
“Converting currencies and making international payments in multiple currencies shouldn’t have to be a headache and businesses should consider the substantial savings they could make. Put simply, high costs hamper growth, so it is crucial to take a correct and savvy approach to currency conversion from the outset.”