The fee on the invoice is rarely what hurts. Exchange rate markups, bank deductions and border duties do the damage. Meanwhile, the G20 looks likely to miss its targets.

Ask a small business what it pays to send money abroad, and it will usually quote the transfer fee. That number is the easy part. The larger cross-border payment costs sit elsewhere. They hide in the exchange rate, in bank deductions and in duties that land at a customer’s door.

So we asked industry leaders one question: what is the biggest hidden cost small businesses face when paying or getting paid across borders, and how has your company reduced it? We wanted real figures over general advice. Two respondents answered, and we have used one. Below, we set his reply against the data.

Where cross-border payment costs really sit

For most small firms, the biggest of the cross-border payment costs is the markup hidden in the exchange rate. In 2023, UK fintechs including Wise, Revolut and Monzo put high street bank markups at 2.5% to 2.7%. That is above the mid-market rate. Wise estimates that UK small businesses lost £2.8 billion to hidden international fees that year. Research it commissioned projects £7.5 billion in 2027. Globally, Wise puts hidden FX fees at $274 billion in 2025. These figures come from a firm that sells the alternative, so treat them as estimates.

Receiving banks take a further cut. The Financial Stability Board puts receiving-side costs at 0.1% to 1.3% of the amount sent. Those deductions often come out of the payment itself, so a supplier receives less than the invoice says. As a result, finance teams lose hours chasing short payments and reconciling the gap.

Speed is less of a problem than it was

Slow transfers are now a smaller part of cross-border payment costs on major routes. Swift data shows 90% of cross-border payments over its network reach the receiving bank within an hour. However, only 43% reach the end customer within that hour, because most delays happen in the receiving country. In addition, ISO 20022 messages have been mandatory since 22 November 2025. Their richer data should make reconciliation easier.

The cost at the checkout

Our respondent runs a custom apparel business that sells to companies abroad, and he looked at the selling side.

“The hidden cost most small businesses miss isn’t on the bank statement. It’s at the checkout. When an overseas buyer sees a price in dollars, they have to work out the conversion themselves and guess what their card provider will add. A lot of them simply leave. That’s a lost sale, and it never shows up as a fee.

We fixed it by pricing in the customer’s own currency, so they see the real number before they pay. We’re also upfront that customs duties and local taxes are paid by the buyer, so nobody gets a surprise bill at the door. The fees on the payment side are real too. According to a 2025 Wise and Cebr study, US small businesses lost an estimated $43 billion in 2024 to hidden fees on international transfers and currency exchange.”

Conor Smart, Managing Director, Arklavo

His Wise figure checks out. The Wise and Cebr study put total hidden fees for US small businesses at $153 billion in 2024. International transfers and currency exchange made up $43 billion of that. Local-currency pricing is a sound fix too. However, the most cited checkout figures come from older Shopify material.

His duty point is more pressing than ever. Leaving duties to the buyer avoids a cost for the seller, but it moves the surprise to the customer’s door. Meanwhile, those charges are rising. The US suspended its $800 de minimis exemption on 29 August 2025, according to US Customs and Border Protection. Since 1 July 2026, the EU has charged €3 per product category on parcels under €150. The UK will also scrap its £135 relief from October 2028.

Card fees after Brexit

Card payments add their own cross-border payment costs in the UK. After Brexit, interchange on UK online card payments to EEA merchants rose sharply. It went from 0.2% to 1.15% on debit cards and from 0.3% to 1.5% on credit cards. The Payment Systems Regulator estimates this costs UK businesses £150 million to £200 million a year. In January, the High Court rejected a challenge by Visa, Mastercard and Revolut to its power to cap those fees. However, the level and timing of any cap are still undecided.

What cuts cross-border payment costs

The clearest fix is to avoid international rails where possible. Providers such as Wise, Airwallex and Revolut Business give firms local account details. A euro payment can then travel over SEPA, and a sterling payment over Faster Payments. The World Bank found that fees on €20,000 business transfers fell to 0.01% or less after Albania and Montenegro joined SEPA.

Still, cross-border payment costs do not disappear. Someone still converts the currency. Wise lists US business conversion from 0.23%, plus fees such as $6.11 to receive a US wire. Banks are moving too. In October, OakNorth chose Wise Platform so its business customers can pay at the mid-market rate. Its director of business banking, Peter King, called it “a better and more transparent way to move money internationally”.

Domestic options are improving as well. Pay by bank can cut card fees on local sales, as our explainer on pay by bank describes. Firms expanding abroad face wider choices, as our piece on cross-border expansion showed. Faster business transfers are arriving too, as our report on Stripe’s instant B2B transfers explained.

What to watch next

The G20 wants cross-border payment costs below 1% on average by the end of 2027. It also wants no route above 3%, and 75% of payments arriving within an hour. In October 2025, the Financial Stability Board said those targets were unlikely to be met. A Federal Reserve note in August found North American business payments cost more than the global average. Those cross-border payment costs have also been slowly rising. Watch, too, for the UK decision on a card fee cap. The Nexus link between Asian payment systems is also due to go live in 2027.

Above all, the lesson is simple. The fee a bank quotes is only the start. Firms that check the rate, the deductions and the duties will find where their cross-border payment costs sit.

FintechBits covers payments, banking and fintech developments for readers in the US and UK. This article is for information only and is not financial advice. Views expressed are those of the FintechBits editorial team.