UK SME’s Struggling with “Unfair” FX Pricing, Slow Payments

A new report finds that UK SMEs are still relying heavily upon their banks for FX and cross-border payments, but feel the FX pricing they receive is “unfair” and that payments take too long.

The report, published by payments fintech Neo, and conducted by Censuswide, found that 78% of SMEs rely on traditional banks for cross-border payments and that 55% thought their payments pricing unfair. A further 45% complained about the speed of execution, and 42% about the speed of reporting. The report says that it takes on average 2.81 days for funds to appear on SME’s bank statements, with some taking as long as five days to appear.

On FX specifically, 48% of respondents found their pricing “unfair”, while 45% complained about speed of execution and 34% about the time taken to report transactions. The majority, 72%, added that FX had been a “critical matter” during 2023, 25% said it was a relatively important matter. To reinforce this, the survey also found that 95% of SMEs are taking the threat of negative currency impacts on their bottom lines seriously and have an FX risk management policy, while 84% have an in-house FX expert.

As was found in a report from MillTechFX recently, 75% of respondents to this survey said they are “considering” diversifying their banking pool following the banking crisis, while 6% have already done so.

“While cross-border payments have improved for consumers, standards in the B2B market have largely remained the same. Payments are still slow, fees are hidden and tracking is largely non-existent for many SMEs

“While most CFOs and treasurers continue with traditional banking partners, the research shows that they are looking into other options such as non-banking payment solutions and virtual accounts,” says Lauren Descout, CEO and co-founder of Neo. “Traditional banks simply can’t compete with the faster, easier, and more secure service that fintechs provide, and many SMEs are beginning to rethink their traditional banking partnerships as a result.

“The research has highlighted that SMEs are also looking for solutions to tackle increasingly volatile currency markets,” he adds. “It’s really positive to see that the vast majority of SMEs have FX risk management policies in place, it’s vital they continue to monitor its effectiveness as currency markets move very quickly.”