Global: Fintech Companies Unite to Eliminate Hidden Bank Fees in International Payments

A collective of fifteen prominent fintech companies in London, including Wise, Revolut, and Monzo, have joined forces to call for an immediate review of regulations pertaining to hidden bank fees associated with international payments.

In an open letter addressed to Chancellor Jeremy Hunt, the signatories emphasize that consumers and SMEs in the UK incurred a staggering £5.6 billion in hidden foreign exchange fees during 2022. They argue that the existing legislation allows major providers to generate substantial profits through these undisclosed charges.

The letter highlights a prevalent practice among firms, wherein they present currency conversion services as having “zero fees” or “0% commission.” However, the signatories contend that this practice is highly misleading since a significantly larger fee is embedded within the exchange rate, ranging from 2.5% to 3.7% over the mid-market rate for transfers to EUR or USD with UK high-street banks. Customers are often unaware of this additional charge.

The fintech companies urge the Chancellor to address this issue during the ongoing Payment Services Regulation review. To that end, they have outlined five key demands:

1. Prior disclosure of the complete cost of currency conversions to consumers and SMEs before payment initiation.
2. Inclusion of any mark-up over the mid-market rate within the legal definition of a “currency conversion charge.”
3. Mandatory use of an aggregated mid-market rate provided by an unbiased entity (e.g., Bloomberg, Refinitiv, New Change FX) approved by the Financial Conduct Authority (FCA).
4. Extension of these rules to cover global currency conversions in support of Global Britain, rather than being limited to EU currencies.

The letter also offers guidance on how the Treasury can assist the FCA in eliminating vague language and ensuring clarity for all companies regarding compliance with the rules.

Magali Van Bulck, Head of Emea Policy at Wise, emphasized, “Hidden fees in foreign transactions simply should not exist in 2023. Concealing additional costs within inflated exchange rates and misleadingly labelling them as ‘zero fees’ detrimentally affects the financial well-being of individuals and businesses across the UK. With the Consumer Duty coming into effect at the end of the month, this is entirely unacceptable and a clear example of firms failing to provide fair value to customers.”