A group of UK FinTechs, including Monzo, Revolut, Wise, and Klarna, are calling for an "urgent review" of existing laws on hidden fees for international payments.

Thirteen companies signed a letter revealing private research which suggests consumers and SMEs in the UK lost a total of £5.6 billion in mostly hidden foreign exchange fees in 2022 alone.

The letter says that these hidden fees occur despite the widespread practice of firms claiming their currency conversion services have 'zero fees' or 'zero per cent commission'.

The thirteen businesses, which also include Truelayer, Teya, PayPlan, Seedrs, NCFX, Fairer Finance, Startup Coalition, GoCardless, SumUp, Fire, and Plum, say that this practice is highly misleading given that a much large charge is often embedded into the exchange rate.

According to the coalition, these embedded charges can range from between 2.5 and 2.7 per cent over the mid-market rate for a transfer to euros or dollars with a UK High Street Bank, fees which it says are never communicated to the customer.

The group is calling for chancellor Jeremy Hunt to force firms to show the total cost of currency conversations up front to consumers and SMEs before they make a payment.

The FinTechs also want the legal definition of a currency conversion charge to include any mark-up over the mid-market rate.

Additionally, they are urging the government to make sure companies use an aggregated mid-market rate issued by a neutral provider – for example Bloomberg or Reuters – which is approved by the Financial Conduct Authority (FCA) as an official mid-market rate provider.

The letter said that these rules need to apply to global currency conversions to "support Global Britain, and not just to EU currencies".

“Hidden fees in foreign transactions simply shouldn’t exist in 2023," said Magali Van Bulck, head of EMEA policy, Wise. "Burying additional costs in inflated exchange rates and labelling these as ‘zero fee’ is having a detrimental effect on the finances of people and businesses across the UK.

"In light of the Consumer Duty coming into force at the end of the month, this is completely unacceptable and a textbook example of how firms are not “providing fair value to customers”.

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