Australian businesses are paying $5.74bn each year in excess foreign exchange fees, according to new research from Aussie-born payments company Airwallex.
The company is calling on the Government to step in and direct the ACCC to prioritise this issue as the costs are hurting businesses and ultimately costing consumers.
Airwallex has also done specific calculations on the impact on the retail sector, finding Aussie retailers on average are being charged on average $45,279 in excess fees each year. This jumps to $49,180 for online retailers, compared with $5,786 across all types of businesses.
Nathan McNally, Account Management Lead, Airwallex says “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 being rorted without realising it and it’s time for the Government to step in.
“Businesses are feeling the crunch and consumers’ hip pockets are hurting. Simple changes like mandating more transparency in foreign exchange fees would have a deflationary effect by promoting competition.
“What can look like just a couple of cents of difference on the exchange rate adds up to big bucks out of your pocket.
“This is a whopping $5.74bn cost to businesses that are hiding in balance sheets in plain sight.
“The excess exchange fees that businesses are paying is highest for retailers and ultimately get passed on to everyday Australians at a cost of $298 per person each year.
Nathan McNally, Account Management Lead, Airwallex continues, “retailers are some of the worst-affected business types because of the nature of their operations where they need to buy materials and products from overseas, manage the freight and logistics of moving products around, and pay for marketing and advertising before they can even make a sale.
“At every stage of that process, someone is clipping the ticket with excess foreign exchange costs. 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.
“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 which are just fattening the banks’ bottom lines and hurting yours.
“In this inflationary environment, we know businesses have to fight to keep their products affordable despite rising costs and one of the quickest ways to do that is to shop around on your international transaction partner.”
