Wise accuses high street banks of hidden exchange rate fees

For GBP to EUR, Wise reports that HSBC has the highest fee for exchange rates (3.7%), followed by Lloyds at 3.6%, Barclays at 2.75%, and NatWest, TSB and Santander all at 2.5%. In the case of GBP to USD, HSBC also remained the bank with the highest fees with 3.7%, tailed 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 Zing, HSBC’s new competitor to Wise, were found to have no hidden fees. The study looked at these exchange rates between December 2023 and January 2024. In each case, Wise argues that these marked-up exchange rates were not communicated as a cost, where those that didn’t mark-up used the mid-market rate. Cross-border payments regulation requires that payment service providers “shall inform the payer prior to the initiation of the payment transaction, in a clear, neutral and comprehensible manner, of the estimated charges for currency conversion services applicable to the credit transfer.” Wise also mentions that the widespread nature of these fees is contributing to the breakdown in trust in banks. Independent research conducted by Censuswide polling 1,000 UK adults in January 2024, also found only 22% of Britons think their bank gives them a fair deal across products and services. Nine-in-ten of those surveyed said that banks tend to mark-up exchange rates. Kristo Käärmann, CEO and co-founder, Wise, says: “For thirteen years, we’ve challenged banks to come clean about their fees. Not much has changed voluntarily. Banks still hide their markups and refuse to be transparent, because they believe hiding fees gets customers to overpay. They may be right. Not all people and business owners have the time and desire to calculate the hidden margins they are charged. “The rise of new companies that are open about fees, including Wise, shows the value of transparency. HSBC’s launch of Zing suggests they understand this too – making their refusal to come clean to their existing customers is quite cynical. It’s time banks were transparent about exchange rates, and for hidden fees to finally become a thing of the past.”