SMEs overlooking costly banking choices for international trade

A survey of 200 small- to medium-sized enterprise (SME) owners and decision-makers, commissioned by Money Transfer Australia, found that the majority are using the big four banks for international transactions, despite these banks generally having higher exchange rate mark-ups and fees compared to specialist money transfer providers.

The ACCC has reported that fintech companies typically offer better pricing than the major banks, even after the latter have lowered or removed flat fees in recent years.

The study indicated that businesses could be paying up to $850 more for every $20,000 exchanged through banks, compared to as low as $100 via non-bank money transfer providers.

Despite this, 62 per cent of respondents continue to use the major banks, with an additional 14 per cent using smaller banks. Nearly a third (31 per cent) reported always using the same bank or provider.

The survey also found that 88 per cent of SMEs are aware of the fees associated with international transactions and 89 per cent know the currency exchange mark-ups they incur. Ninety-one per cent check these fees before transacting.

Larger businesses are more likely to use major banks for international transfers, with 74 per cent of companies employing over 200 staff doing so, compared to 68 per cent of those with 11–50 employees and 45 per cent of microbusinesses.

Larger firms are also more inclined to use the same bank or provider, with 42 per cent of large businesses indicating this preference.

When asked why they prefer banks for foreign trade, trust and local presence were cited most frequently. Over half (51 per cent) of respondents expressed greater trust in banks, while 31 per cent valued having access to local staff.

Additionally, 30 per cent are hesitant to switch to unfamiliar service providers.

Alon Rajic, founder of Money Transfer Australia, said: “In 2023–2024, Australian businesses closed down at almost the same rate as new ones opened. In the volatile economy of the past few years, it makes good sense for businesses to identify where they could further cut costs.

“Many people don’t understand that some non-bank money transfer specialists, such as TORFX and OFX, have been in business for as long as 20–25 years. They are ASIC authorised, well-established and reputable.

“Being complacent about bank fees or fearful of change can cost a business. Specialist providers don’t charge extra fees and offer exchange rates well below the going mid-market rate. It pays to shop around.”

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Adrian Suljanovic is a journalist at Broker Daily with more than two years experience reporting on all facets of the third party distribution channel.

Adrian has written for a range of business and finance titles including IFA, Investor Daily and Lawyer’s Weekly before joining the mortgages team in 2022.

He graduated from the University of Wollongong in 2021 gaining a Bachelor of Communication & Media with a major in Digital & Social Media.

E-mail Adrian at: This email address is being protected from spambots. You need JavaScript enabled to view it.