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New research from Airwallex shows Australian businesses are allegedly paying $5.74 billion in excess foreign exchange fees charged by big banks across the country for international transactions.
The research claims that Australian retailers are, on average, forking out $45,279 in excess foreign exchange fees every year. This jumps to $49,180 for online retailers.
These figures are significantly higher than the $5786 in excess fees paid across all other businesses.
Airwallex Account Management Lead Nathan McNally said businesses were being “rorted” without realising it.
“The excess exchange fees that businesses are paying is highest for retailers and ultimately gets passed on to everyday Australians at a cost of $298 per person each year,” Mr McNally said.
“In my job, I see it every day where businesses are paying an inertia tax for not shopping around on who they use for their international transactions.
“Businesses are feeling the crunch and consumers’ hip pockets are hurting.”
The company has called on the Australian Competition and Consumer Commission (ACCC) to rectify the issue as the costs continue to hurt businesses and ultimately consumers.
McNally said what looked like just a couple of cents of difference on the exchange could add up to big bucks out of pocket — in this case, a $5.74 billion cost to businesses hiding in plain sight.
According to Airwallex, simple changes, like mandating more transparency in foreign exchange fees, would have a deflationary effect on foreign currency rates by promoting competition.
The consumer watchdog sounded a similar tune in 2019 when it completed its Foreign Currency Conversion Services Inquiry.
The ACCC inquiry back then highlighted that a lack of robust competition was partly to blame, along with confusing pricing, which made it harder to shop around for a better foreign rate.
As a result, many consumers continued to use the big four banks for foreign exchange services despite the availability of much cheaper alternatives.
Airwallex claims the issue is still prevalent across the country.
“What we find is that too often as businesses grow they stick with the financial provider and the package they were offered when they started,” Mr McNally said.
“The financing the bank offered your business is obviously critical, but the transaction package that came with it bundles up and hides high exchange rates.”
Airwallex pointed out that while it was aware of the inflationary environment, businesses needed to invest in an affordable international transaction partner to keep their products affordable in future.
