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The $800 million problem facing American small businesses
For any business, going international can mean new customers, new suppliers, new ways of thinking. In short, new opportunities. For US small - and medium-sized businesses (SMBs) operating in today’s economic climate, the ability to remain successful and competitive means operating globally from day one.
But new research commissioned by Wise¹ reveals that small business leaders are seeing their hopes of global expansion dashed by a range of macroeconomic and logistical challenges - the biggest being the cost and complexity of international payments.
Almost half (49%²) of small business leaders surveyed agree that the complexity of international payments prevents them from expanding their operations abroad, while over a third (31%) expressed that they would enter new markets if the costs of international payment were reduced. Inflation, taxes and regulatory barriers were also cited as key barriers to going global.
It’s no surprise. SMBs lost almost $800 million in hidden fees³ when sending money internationally in 2023 alone – and business leaders are taking note. The vast majority (82%⁴) either don’t believe that their bank is transparent about the costs of cross-border payments or aren’t sure.
So how can this problem be solved? A resounding 77%² of SMB leaders surveyed agree that regulators and/or policymakers should ensure that financial services providers are honest and transparent about what they charge small businesses for international payments. Certainly, regulators and policymakers have an opportunity to help SMBs when it comes to transparency. Namely by providing more information on hidden fees in international payments and keeping this top of mind for future policies supporting the SMB sector.
But perhaps even more revealing, 81%² believe that financial services providers should proactively demonstrate honesty and price transparency on their own, without regulatory interventions.
Here at Wise, we know a thing or two about just how big of an issue managing money internationally can be. For over 13 years, we have been working to make international payments fast, convenient, affordable, and transparent. We believe that our customers should always know what they’re paying on an international transfer, so that they can make the right decisions to suit their business’ needs. And we actively encourage others across the industry to do the same.
This Small Business Month, we want to remind SMB leaders that dreams of taking your small business international shouldn't be held back by costly and complex financial services.
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| Read how Wise Business helped one Austin SMB establish a global brand, manage 19 currencies in one convenient app and keep more of what they earn by avoiding hidden fees. |
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About the research
Hidden Fees Research – Conducted by Capital Economics
Capital Economics has estimated the fees on foreign exchange transactions paid by US consumers and small and medium-sized businesses nationally and in every state. The estimates are produced for the years 2018 to 2023 using data from US and international organizations as well as research of the typical transaction fees and exchange rates margins charged in five areas: consumer travel spending abroad, remittances sent from the US, trade in goods and services by small and medium-sized enterprises and portfolio investment earnings abroad.
SMB Research – Conducted by Censuswide
A survey of 1,003 'business decision makers' working at Small/medium sized businesses in the US (businesses with 1-500 employees) - minimum 125 per Texas, California, Florida, New York with the remaining sampled across the rest of the US – conducted by Censuswide between 4th April and 16th April 2024. Censuswide abides by and employs members of the Market Research Society and follows the MRS code of conduct and ESOMAR principles. Censuswide is also a member of the British Polling Council.
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Research conducted by Censuswide
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‘Strongly agree’ and ‘Somewhat agree’ responses combined
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Research conducted by Capital Economics
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‘Strongly disagree’, ‘somewhat disagree’, and ‘somewhat agree’ responses combined.
*Please see terms of use and product availability for your region or visit Wise fees and pricing for the most up to date pricing and fee information.
This publication is provided for general information purposes and does not constitute legal, tax or other professional advice from Wise Payments Limited or its subsidiaries and its affiliates, and it is not intended as a substitute for obtaining advice from a financial advisor or any other professional.
We make no representations, warranties or guarantees, whether expressed or implied, that the content in the publication is accurate, complete or up to date.
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