In the UK, if you have gone for a currency exchange, whether for business or personal needs, you have probably come across services advertising “transparent pricing,” “zero commission,” or “no hidden costs.” Yet when it comes to the actual exchange, the amount you receive often falls short of what you expected. Ever wondered why?This is …
In the UK, if you have gone for a currency exchange, whether for business or personal needs, you have probably come across services advertising “transparent pricing,” “zero commission,” or “no hidden costs.” Yet when it comes to the actual exchange, the amount you receive often falls short of what you expected. Ever wondered why?
This is because, in reality, it is very rare to find a currency exchange with no hidden fees in the UK. Most currency exchange service providers, whether it is a bank, kiosks, high-street exchange bureaus, or online platforms, use these terms merely as marketing tactics to lure you in, and then slide in hidden fees without you even noticing. But why do they do that? Well, beyond a marketing perspective, there are other motives behind this approach. We will explore those reasons in this blog to help you fully grasp the concept of hidden fees, so when you go for your next exchange, you know what to watch for and how to dodge these extra costs.
The first reason why you are charged extra costs despite carefully choosing a provider offering currency exchange with no hidden fees in the UK is that you are not getting the actual mid-market rate. Many FX service providers claim to have no separate commission, but what they actually do is add a margin or markup to the exchange rate to maintain their profit silently. This slightly different rate might go unnoticed by you, but it effectively disguises their entire profit behind this poor rate. For example, the real mid-market rate for EUR/GBP is 1.16, but a provider offers you 1.10. This rate might seem competitive to you with a ‘no commission’ deal, but in reality, for every pound you exchange, that extra amount goes into their pocket as profit.
Another common reason why extra costs are added to the currency exchange is to cover operational expenses. As currency exchange isn’t free of costs, and most kiosks and bureaus run only on the profit earned through exchanges, therefore, to meet these operational needs and overhead costs, the margin is built in as a hidden cost. However, most currency exchange services in the UK do not clearly include operational costs in their fees, unlike commissions, but silently add them with unfavourable rates.
Currency exchange isn’t free from market risks; there are some inherent risks, such as unpredictable market movement, high volatility and currency risks, which can unexpectedly turn any profitable deal into a loss. Considering these situations, exchange services often maintain a margin as a financial buffer for potential losses if the market moves against them before a currency is sold to a customer. This buffer often comes as an additional cost, added to your exchange rate, which may result in a different rate than expected.
4. Leverage Lack of Knowledge
Let’s be honest, most individuals are often not fully aware of the mid-market rate, disguised fees, and other key concepts, so they often only believe what they see. And for currency exchange services, this is business, and of course, they leverage consumers’ lack of knowledge to attract customers and capitalise on it by providing unfavourable costs. This allows them to have more customers by advertising currency exchange with no hidden fees in the UK, while a substantial fee is deducted as unstated expense.
5. Convenience Premium
Most people need currency exchange services while travelling, and finding an exchange service at an airport, hotel, or tourist spot does feel like a lifesaver, but actually it is not! These service providers very strategically capitalise on your need for urgent cash, and in exchange, provide poor exchange rates with hidden costs.
So, now when you’ll find a different exchange rate than the mid-market rate, you’ll know the possible reasons, and can make a smarter choice by not getting trapped in these tactics. Always look for customer exchange with no hidden fee in the UK and actual transparent pricing, reflecting every fee that is to be deducted. Also, if you are travelling, do not fall for tourist traps; look for a reliable local exchange service or an online platform that can offer a much more favourable rate.
Looking for a reliable currency exchange in the UK? Linea Global is here for you!
Unlike banks and other providers, with Linea Global, you get what you see. We work on complete transparency; therefore, we not only advertise a currency exchange with no hidden fees in the UK, but we also prove it by offering market-competitive, favourable, and fair rates.
Get in touch today for a quick and hassle-free currency exchange!
