In 2023, 658 million euros lost by SMEs in hidden costs.

How many times have you heard stories about hidden fees in international payments? How many times did you end up with the saying “x$ for service y” in your account statement or other generic labels, without understanding what they were referring to?

It often happens that the exact nature of the fees applied when making international payments is not immediately clear. Account statements sometimes contain generic terms that do not offer a transparent understanding of amounts.
Disclaimer: The aim is not to question the billing of services, but to highlight the importance of total clarity on the application of any additional costs.

In 2023, it was French SMEs engaging in international payments that were most exposed to this problem, with undisclosed costs amounting to 658 million euros. (according to a study conducted by Capital Economics for Wise).

We reveal how certain beliefs, promises and phrasings can be somewhat opaque, and demonstrate how to demand full transparency on the total cost of your international payments, including exchange rate margins.

1. The non-negotiability of costs

While the basic costs of the financial system are real, the margin that financial services apply - the commission - is almost always negotiable. A 2% commission on a transfer of €10,000 means that €200 could be negotiated. This is not a rule, but negotiation is almost always possible.

The shower thought:

“I am looking for more details on this matter. Could you put me in contact with  someone authorized to discuss the scope of this offer, please?”

2. The generic “- X$ for Y services”

The names given to the commissions may be too general and lacking in precision. This ends up grouping several small fees which, together, form the total amount that you pay for. These commissions allow the service to have margins and to meet other costs.

The question to ask:

“Normally, every amount withdrawn has a code and a reference. Since there are none here, could you help me get the details of this general description?”
In addition, asking to explain this approach before a certain package deal is proposed, is entirely possible, even recommended.

3. “Exchange fees are slightly higher to ensure the stability and security of your transactions.”

Financial institutions apply two types of exchange fees to foreign currency transfers. It's the trade margin on the market exchange rate - otherwise said, the price at which a given currency can be bought or sold.

The exchange rate offered by the service does not reflect the actual buying or selling rate of currencies: all exchange service providers take a margin in the process. Some have higher margins than others.
A commission is also charged on the transferred amount, typically ranging from 0.01% to 0.10%.

However, the currency market reacts in real time to geopolitics and other factors, and providers cannot make it more or less advantageous. Therefore, concepts such as icreased stability or the security of exchanges should not be considered as additional services.

What to ask for:

“What exactly is the mark-up ? What percentage do you apply, and how much the effective rate is in real time ?”.
Compare your provider's exchange rate with Google's to get a clearer picture. The latter is the average exchange rate, that is, the rate set by the market.

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The golden rule is simple. A trusted partner will inform you of all fees and costs with transparency.
Keep an eye out for services that don't have this essential clarity.

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