For GBP to EUR exchanges, Wise reports that HSBC charges the highest fee at 3.7%, followed closely by Lloyds at 3.6%, Barclays at 2.75%, and both NatWest, TSB, and Santander at 2.5%.
Regarding GBP to USD, HSBC also leads with the highest fees at 3.7%, followed by Lloyds at 3.6%, TSB at 2.9%, Barclays at 2.75%, NatWest at 2.5%, and Santander at 2.3%.
In both cases, Starling, Monzo, and HSBC’s new competitor to Wise, Zing, were found to have no hidden fees.
The study explored these exchange rates between December 2023 and January 2024, with Wise asserting that many of these inflated exchange rates are not communicated as costs, while those that do not mark up utilize the mid-market rate.
According to cross-border payments regulation, payment service providers are required to clearly inform customers of any estimated charges for currency conversion services prior to initiating a payment transaction.
Wise has pointed out that the prevalence of these fees is contributing to a decline in trust in banks. Independent research conducted by Censuswide, which surveyed 1,000 UK adults in January 2024, revealed that only 22% believe their bank offers a fair deal on products and services. Furthermore, nine out of ten respondents indicated that banks tend to mark up exchange rates.
Kristo Käärmann, CEO and co-founder of Wise, stated: “For thirteen years, we’ve urged banks to be transparent about their fees. Little has changed voluntarily. Banks continue to conceal their markups and lack transparency, believing that obscuring fees leads customers to overpay. They may be correct, as not everyone has the time or inclination to calculate hidden margins.”
He added, “The emergence of new companies that are open about fees, such as Wise, highlights the importance of transparency. HSBC’s introduction of Zing suggests they recognize this need, yet their failure to disclose fees to existing customers is somewhat cynical. It’s time for banks to be upfront about exchange rates and eliminate hidden fees altogether.”
For more insights into payments, visit NextGen Nordics on April 23, 2024.