The survey found that 62 per cent of SMEs are conducting their international trade through the big four banks this year, meaning that they are being charged with higher exchange rate mark-ups and fees than specialist money transfer providers. Furthermore, an additional 14 per cent transact through a smaller bank and 31 per cent use the same bank or provider for their money transfer needs.

In a recent report, the ACCC noted that international money transfer fintechs offer better prices than the big four banks, even after the latter removed or reduced flat fees on transfers in the last five years. Money Transfer Australia also pointed out that for every $20,000 exchanged through the banks, businesses could be paying up to $850 extra, compared with as low as $100 through a non-bank money transfer provider.

Surprisingly, the survey also found that 88 per cent of SMEs know how much they are paying in fees when they transact internationally, and 89 per cent know how much they are paying in currency exchange mark-ups. 91 per cent also check the fees and mark-ups payable before they transact.

The survey also noted that the larger the business, the more likely they are to use a bank for international money transfers. A total of 74 per cent of those with more than 200 employees use a big-four bank, compared with 68 per cent of those with 11-50 employees and 45 per cent of micro businesses. Furthermore, the larger the business, the more likely it is to also use the same bank or provider at 42 per cent of large businesses, 33 per cent of small and medium-sized businesses and 25 per cent of micro businesses. Meanwhile, small businesses (11-50 employees) paid more attention to the extra fees in transferring money internationally.

Why businesses are sticking to the banks

As to why most businesses still conduct foreign trade through banks, 51 per cent said they trusted banks more and 31 per cent said they prefer to have access to ‘people on the ground’ in Australia over an online service, which potentially offers support staff offshore. Furthermore, 30 per cent don’t like to switch to new service providers that they are not familiar with and 15 per cent enjoy preferential rates through their bank. 14 per cent, meanwhile, prefer to do all their banking in one place.

Money Transfer Australia founder Alon Rajic commented, “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.”

“In the current economy especially, it is understandable that business owners want to stick with a money transfer service they know and trust. What many people don’t understand is that some non-bank money transfers specialists, such as TORFX and OFX, have been in business for as long as 20 to 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.”

The report also underscores the robust foreign trade Australia is experiencing, with the Australian dollar being the sixth most traded currency in the world. Foreign investment hit $4.7 trillion in 2023, while international goods trade jumped another $537 million in June 2024 alone. To date, Australia’s overall international trade is worth 48 per cent of its GDP.

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The ACCC’s proposed changes include a ‘Best Practice Guidance’, which would require IMT providers to subtract fixed fees from the amount sent, standardising fee structures across the industry.

However, not everyone has the time, resources, or knowledge to compare services, COSBOA points out.

“Over 40% of consumers do not compare,” said Luke Achterstraat, CEO of COSBOA. “And so this update does nothing to encourage them to seek better alternatives.”

Guiding SMEs towards better deals

COSBOA is now urging the ACCC to make it easier for SMEs to compare IMT providers. This could involve illustrating foreign money exchange (FX) margin costs in Australian dollar terms, which would make comparing IMT providers easier for business owners who are time-poor or who lack understanding of FX services.

The SME lobby group also criticised the ACCC for delaying reform in favour of further consultation with sectors that profit from FX fees.

“The ACCC is deflecting key findings and calling for more consultation from banks and the payments industry – sectors that benefit from FX margins,” Achterstraat continued. “We want to see the importance of lower FX prices for small businesses recognised and acted upon. Small businesses need relief, and they need it now.”

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