Misleading bank fees cost the Netherlands 1 billion euros a year

● Consumers suffer the biggest losses in hidden bank fees

● TransferWise calls for end to hidden fees via petition: knowwhatyoupay.eu

The European fintech company ​TransferWise​ announced today that misleading exchange rates and hidden fees for international transactions cost the Dutch economy nearly 1 billion euros per year. Additional research reveals the hidden fees charged by ABN Amro, ING, PayPal and Western Union when sending money abroad. The EU’s PSD1 and PSD2 regulations require banks and other financial providers to disclose the ‘real costs and charges’ of payments but so far they have failed to deliver. The research was conducted by independent research agency Consumer Intelligence for TransferWise.

In one year alone, the Netherlands has lost €996.343 million in hidden fees, which equates to a loss of €72.85 for every Dutch adult or €129.39 for each family.

Traditional providers most expensive to send money abroad
The cost of sending money outside the eurozone is a lot higher than consumers might think, because the bulk of the costs are hidden. On top of a standard fee, which differs from bank to bank and is often not disclosed, additional charges are hidden within a bad exchange rate. This means that a small international transaction of €250 (from EUR to USD) can cost up to €22.

Consumers suffer the biggest losses on holiday
Consumers are hit the hardest: their losses add up to €526.63 million. The highest charges, €384.19 million, were spent on exchanging currency or paying by card on holiday. Sending money to family abroad costs Dutch consumers an additional €42.36 million. Large-scale consumer research by YouGov (2017) has shown that 93% of Dutch people don’t understand the pricing structure of an international transaction, while the European average is 86%. Both PSD1 and PSD2 have stipulated that providers should be transparent by showing the real costs and charges of a transaction.

Small businesses have spent the most on hidden fees
Businesses unknowingly spent €469.71 million on hidden fees in a single year. SMEs as a group overpay by €360.35 million, but it’s mostly the smaller businesses with fewer than fifty employees who suffer the biggest blow, as hidden fees will cost them €144.49 million. Business trips outside the eurozone are responsible for €46.52 million in undisclosed charges for international transactions. Additionally, Dutch people lose out when portfolio investments abroad need to be converted into their own currency. Their hidden bill is €62.83 million.

Time for new legislation
Despite the implementation of PSD2, the European Commission haven’t succeeded in making transactions more transparent. But their new proposals on reforming cross-border payments are the perfect opportunity to set the record straight. The Netherlands could play a key role in making sure that banks can no longer get away with the lack of transparency. That’s why TransferWise have started a European campaign, ‘Know what you pay’, calling on consumers to sign the petition and make sure the proposals get the support they need. To maximise the impact of the campaign, the company has sent a letter to the Minister of Finance, Wopke Hoekstra, to ask him to fully support the European Commission’s proposals.

Kristo Käärmann, CEO and co-founder, TransferWise: ​“Nearly 1 million Dutch citizens live in another country and even more do business across borders or go on trips for business or for leisure. This exposes them to financial bureaucracy and misleading prices when they pay or get paid in another currency, which costs them 1 billion euros a year. We have launched a new campaign, Know what you pay, to highlight the lack of transparency. TransferWise have shown that international payments can be simple and transparent, without any of the hidden fees.”

About the research
The research, commissioned by TransferWise, was conducted by independent and international research agency Consumer Intelligence. The fieldwork was undertaken in April 2018. Consumer Intelligence have estimated the lost and hidden fees from the amount of money that flows from the following sectors:

● Spending by Dutch consumers abroad (personal holidays and business trips): card fees and cash exchanges.
● Trade in goods and services: fees for invoices in another currency.
● Remittances: fees for sending money to family back home.
● Portfolio investment earnings abroad: Dutch residents earning income in a foreign portfolio investment and the associated fees to convert these earnings back to their home currency.

Consumer Intelligence have consulted publicly available sources, such as De Nederlandse Bank (DNB), Eurostat, European Central Bank (ECB), Centraal Bureau voor Statistiek (CBS), World Bank, Visa Inc. Netherlands to calculate the total amount of money that flows out of the Netherlands and the associated total losses.

All pricing comparison data was obtained independently by leading market research company Consumer Intelligence through online banking research. The fieldwork was carried out daily between the 13th and the 17th of November, and represents an average of the findings across the course of the week. The full research shows the quoted overall costs of sending Euros internationally from the Netherlands through major Dutch banks for the sums of €250, €1,000, €5,000 and €10,000 via their online services. The routes included are EUR to USD, EUR to GBP, EUR to CAD, EUR to AUD and EUR to INR.

For more details and clarifications on the methodology and results of the research, please see here.

About TransferWise
TransferWise is a new kind of financial company for people and businesses that travel, live and work internationally. It’s the fairest, easiest way to manage your money across borders. With a simple money transfer platform and borderless accounts, it makes managing your money quick, easy and painless. Co-founded by Taavet Hinrikus and Kristo Käärmann, TransferWise launched in 2011. It is one of the world’s most successful fintech startups having raised $397m from investors such as IVP, Old Mutual, Andreessen Horowitz, Sir Richard Branson, Valar Ventures and Max Levchin of PayPal. Over three million people use TransferWise to transfer over €2 billion every month, saving themselves over €2 million every day. www.transferwise.com