It should be far easier for small businesses to determine whether their international money transfer service offers a good deal, the Council of Small Business Organisations of Australia (COSBOA) says, after the competition watchdog found SMEs could lose hundreds of dollars each time they use costly providers.
Household consumers largely use international money transfer (IMT) services to send money to family and friends overseas, but Australian small businesses contribute a significant portion of outgoing funds — and pay for the privilege.
In July, the Australian Competition and Consumer Commission (ACCC) published its review of the best practice guidelines provided to IMT providers, which show banks and fintechs how to best display their services and foreign exchange (FX) fees to users.
That review found small businesses could stand to lose $400 by using the most expensive IMT service to transfer $10,000, instead of using the least costly service.
All told, Australian consumers could save $214.1 million a year in fees by choosing the lowest-cost provider every time they transfer money abroad.
There is one key problem keeping IMT users from those savings.
While increasing competition in the sector between fintechs and established banks is lowering fees and transfer times across the board, the ACCC says consumers, and small businesses, are not doing enough to compare and select the most cost-effective option.
Some 42.5% of survey respondents did not compare IMT supplier fees when processing a transfer, the ACCC said, suggesting many households and businesses are losing out on significant sums.
The ACCC has proposed changes to the best practice guidelines to help customers choose a better deal.
Chief among them is a plan to unify the way IMTs display their transfer fees, with the ACCC proposing all providers subtract total fees from the amount a customer wants to send, instead of adding those fees on top.
Seeing how fees will eat into the transfer amount could spur consumers and small businesses to seek a better option, the ACCC argues.
That addition to the best practice guide is now out for consultation, with the ACCC asking IMT providers and stakeholders to share their views by August 21.
COSBOA is now sharing its view publicly, arguing more should be done to ensure small businesses can easily select the best option for them.
“The good news is that the ACCC is making changes that allow consumers and small businesses who do shop around to compare like-for-like,” COSBOA CEO Luke Achterstraat said in a statement.
“However, over 40% of consumers do not compare, and so this update does nothing to encourage them to seek better alternatives.
“The proposed rules are a minor step forward but fail to address the needs of those who are too busy or do not understand the market for foreign exchange services.”
COSBOA is calling on the ACCC to enforce clearer illustrations of transfer fees in Australian dollar terms, and to cut to the chase on IMT reforms, instead of deferring to another round of consultations with fintechs and the big banks that stand to profit from FX fees.
“We want to see the importance of lower FX prices for small businesses recognised and acted upon,” Achterstraat said.
“We call on the ACCC to act now and not delay these essential reforms.
“Small businesses need relief, and they need it now.”
The ACCC is also consulting on whether providers should estimate the potential fees unknown to the provider before the transfer takes place, and include a disclaimer to customers.
The revised guidance also calls on suppliers to provide up-front disclosure of transfer speeds and provide online tracking for money transfers.
For now, the ACCC has prepared a one-page guide it says will help consumers find the best deal.
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