Singaporeans lost an estimated S$590m to hidden fees in international payments in 2023, according to a recent study by Edgar, Dunn & Company. This financial leakage is primarily due to undeclared exchange rate markups, which many consumers are unaware of. The situation is expected to worsen, with projections indicating losses could reach S$1.03b by 2029.
The study highlights a significant gap in consumer understanding. Although 70% of Singaporeans who make international payments believe they understand the costs involved, only 14% are aware of hidden fees. This misunderstanding is exacerbated by the lack of transparency from many financial service providers in Singapore, who do not clearly disclose the full breakdown of fees.
Small and medium enterprises (SMEs) are particularly affected, having lost S$5.66b in 2023 alone due to these hidden fees. Larger enterprises also suffered, with losses amounting to $142 million. The study suggests that regulatory intervention, such as banning foreign exchange markups or mandating full fee disclosure, could alleviate the financial burden on consumers and businesses.
Banks remain the most popular method for transferring money overseas, used by 63% of Singaporeans, followed by PayPal at 31% and Western Union at 24%. However, 44% of bank users are unsure or do not believe their bank makes it easy to understand international transfer costs. Among these users, 68% expressed that they would better understand the fees if transparency improved.
The findings underscore the importance of transparency in international payments, as 36% of consumers prioritise exchange rates and fees when transferring money. Singaporeans deserve to know the exact costs involved in sending money overseas to make informed financial decisions.
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