Wise reveals SMEs stall going global due to traditional banks

November 29, 2024

A recent survey by WIse, a global fintech company, revealed that small businesses in New Zealand are losing thousands when they use traditional banks due to hidden fees.

Wise’s recent survey talked to over 500 small businesses in New Zealand and 42% of them are held back by international payment fees charged by big, traditional banks.

These extra costs are costing SMEs thousands and thousands of dollars which is preventing it going global.

The reason for the high expense?

Fifty-nine percent of SMEs in New Zealand are using traditional banking options – with over half of these businesses saying that it is the most convenient option and just under half saying it is the most trustworthy process.

But Wise reveals that 91% of business leaders believe that it should be illegal that these big banks are hiding the cost markups of foreign exchange.

“The reason why banks can get away with charging this amount is because of that mismatch of understanding,” says Jack Pinczewski, Asia-Pacific Government Relations Lead for Wise.

“It’s a massive drain on the hip pocket of people who are sending money back home and it’s a massive increase to the cost of inputs for small businesses, particularly small businesses who are trading overseas.”

This has been an issue within New Zealand that Wise says they have gone to government about since operating here six years ago.

Wise says that a third of Kiwi small businesses are spending up to $5000 per year on just fees.

“Traditional banks are charging Kiwis a fee of anywhere from 3-5% of the total transaction amount when sending money overseas. Those fees consist of a currency exchange transfer fee and an exchange rate mark-up, which isn’t made clear to the sender, and is reflected in this research,” adds Tristan Dakin, NZ Country Manager at Wise.

“Demystifying and helping SMEs to navigate the complexities of international expansion is crucial and based on our research, a necessary first step to helping more Kiwi businesses expand beyond New Zealand’s shores.”

Even New Zealand-based software company, Atria says they have saved between $30,000 to $50,000 by not going down the traditional banking route. This money has supported them in marketing and sales, budgets that are often neglected when scaling up.