Smaller exporters are paying over the odds for cross-border payments and are held back from international growth because of extortionate fees, a new study has found.
The grip of traditional banks on international payments has meant that for each cross-border transaction worth £1,000, small business owners overpay £55 on average, according to research from transfer platform Covercy.
With around two-thirds of the 53,000 smaller UK firms currently exporting making more than 20 overseas transactions every month, the study suggested that mounting costs were holding small firms back.
A business owner paying for 20 international transactions a month, for example, could pay up to £1,100 in unnecessary fees totalling £13,200 a year.
Covercy CEO Doron Cohen said that Brexit uncertainty, and likely fluctuations in the value of the pound, could mean that small exporters are disproportionately affected by additional taxes.
“With the potential of being locked out of the single market, these exporters may face taxes which make them less competitive than their EU counterparts – small importers have already suffered an 18 per cent rise in their costs in less than a year, due to fluctuation in sterling’s value,” added Cohen.
“Unfortunately for years, banks have held small businesses hostage with over-the-top and unnecessary transaction fees for cross-border transactions.”
Despite the study’s findings, the Treasury’s most recent overseas trade statistics, from June this year, showed a £1bn increase in exports to EU countries – suggesting exporters were unfazed by the referendum result on 23 June.
Cohen went on to say: “Exporters in the UK appeared to ‘keep calm and carry on’. Exports actually increased by over 8 per cent overall compared to May.”
Recent research from the Federation of Small Business (FSB) revealed that as many as 93 per cent of small UK exporters were dependant on European markets. The FSB identified that two-thirds of the most popular export destinations for British firms were in the EU.
A record proportion of businesses receiving financial help from the UK’s export credit agency last year were small firms – Read more here.
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