British travellers are paying thousands in hidden currency fees when purchasing foreign cash, it has been reported.
A survey of 8,000 customers by currency firm Transferwise found that there were failings in the foreign exchange market, the BBC said.
The study revealed that fewer than half of customers were able to choose the best of four foreign exchange offers using information typically provided by suppliers such as bureaux de change, post offices and banks.
The government’s own Behavioural Insights Team has highlighted similar problems with the system.
The research found that most services ask for a fee or commission charge on top of the exchange rate, but that they are making more money from providing a poor rate than the charge.
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The report said many providers highlight features such as zero fees or commission, which hide the actual poor rate they are offering to consumers.
Capital Economics said individuals and businesses are being charged almost £6bn a year in fees without realising, the BBC reported.
Elisabeth Costa from the government’s Behavioural Insights Team told the BBC: “Small businesses and consumers in the UK are charged billions each year in hidden foreign exchange transaction fees.
“We found that adding clearer information, particularly total costs in pounds, greatly increased consumers’ ability to identify the best value deal.”
Kristo Käärmann from Transferwise, said: ”It’s fine to charge a fee for the service but people should know what that fee is rather than hiding it from customers who think they are paying zero or negligible fees.”
According to the research, commissioned by Transferwise and two other tech companies and carried out by YouGov and Consumer Intelligence, the average Briton will pay more than £5,000 in hidden exchange fees over their lifetime.