An Entrepreneur and an FX guy walk into a bar…

I was in the UK for most of July and met a friend who runs a small import business near Stansted Airport.

At some point, I asked him what his bank charges for FX. He said "nothing, it's included."

I almost spat out my pint. So much for ever expanding into the UK...

But after some digging, the truth came out. There's no such thing as free currency exchange.
What his bank actually does is apply a high spread that they've never disclosed, and then generously "waive" commission fees. Very kind of them.

I asked him to pull up his last transfer confirmation. He did. The bank was applying a spread of 3.1%.

On €80,000 a month, that's roughly €2,500 he's overpaying. Every single month. Nearly €30,000 a year. For a service his bank told him was free.

He had no idea. And honestly, why would he? The bank doesn't show the mid-market rate on the confirmation. They don't show the spread. There's no line that says "our fee: €2,500." It's completely invisible unless you know to look for it.

And here's the thing: even the companies that think they've got it figured out sometimes don't.

I had a call last week with a company right here in Cascais. They're not naive. They're well managed and growing. They use their bank's dealing room, so they're actually negotiating rates rather than accepting whatever the branch gives them. And fair enough, their spread is very decent.

But then we looked at the transaction fees.

Every single international payment, a fixed fee, then a variable fee, then 4% stamp duty on top.

Doesn't sound like much on any individual transfer. But this company does a lot of them, and they're big.

When we added it all up across a full year, they were paying over €10,000 just in transaction fees. Not the spread. Not the exchange rate. Just the cost of pressing "send."

€10,000 a year for the privilege of sending their own money.

Like most businesses, they looked at the negotiated rate, thought "that's competitive," and never looked at the other side of the equation.

This is how banking works for most small and mid-sized businesses. The bank competes hard on the business loan rate because they know you'll shop around. But FX? They know you won't check. So they take it in the spread, or the fees, or both.

Banks are businesses trying to make money. But the lack of transparency means people can't make informed decisions. My friend is a sharp operator. He negotiates hard with every supplier. He'd never accept a 3% surcharge on anything else in his business. The company in Cascais would never sign a contract with €10,000 in undisclosed admin fees. But they've both been paying these costs for years because they were designed to be invisible.

If any of this sounds familiar, comment below or reach out.

Happy to help shine a light on the hidden costs in your international payments Cais Capital

Eduardo