- 1 in 5 small businesses charged hidden fees were pushed into the red as a result, reflective of nearly 4 million SMBs in the U.S.
- 4 in 5 SMBs charged hidden fees believe they are an unfair ‘growth tax’ impacting their ability to invest and expand
US small and medium sized businesses are losing $153 billion annually to hidden fees in financial transactions, according to new research from international money app Wise. Driven largely by frequent and costly transactions required to navigate business operations, the research has found that the financial strain of hidden fees are acting as an undue burden on small business sector growth. Leaders of these businesses agree, as four in five (83%) believe these hidden fees amount to an unfair “growth tax” that limits their ability to expand and invest in their business.
Conducted in collaboration with The Centre for Economics and Business Research (Cebr), the study analyzed responses from over 1,000 financial leaders at small and medium-sized businesses (SMBs) across the United States. Findings revealed 1 in 5 SMBs incurring fees have been pushed into the red as a result. Of these, two-thirds reported going into the red at least once a quarter.
Among SMBs that reported being impacted by hidden fees, international transfer fees are the most persistent financial challenge, occurring an average of 36 times per month, followed by currency exchange fees at 30 times per month. Together, these hidden fees cost SMBs about $43 billion, making up 28% of their total losses.
There is a wide economic impact stemming from the lack of financial security most SMBs experience. Among those incurring hidden fees, seven in ten small businesses (72%) state that unpredictable hidden transaction fees are making it nearly impossible to forecast expenses. SMBs are responding by collectively holding an additional $23 billion worth of cash reserves to manage these costs.
Beyond the immediate financial burden of withholding funds from business use, hidden fees also lead to significant missed opportunities for growth. US SMBs lose an estimated $18 billion annually in potential returns because the money they spend on hidden fees is not able to be reinvested into developing new products and services, hiring, or expansion.
These excess fees also create uncertainty for small businesses, who are forced to guess the true financial costs of daily operations. Being unable to project costs with confidence is making expansion especially difficult for SMBs entering global markets. In fact, as a result of uncertainty and financial strain, more than one in ten businesses (12%) that have been charged hidden fees have delayed or canceled international expansion plans in the past three months. This strain only amplifies the unfair “growth tax” that disproportionately targets the SMB industry and its ability to scale.
“Small businesses are the backbone of our economy, but they’re being unnecessarily hit by hidden fees in financial transactions that are crucial to running their businesses,” said June Yuan, Wise Business Product Lead for North America. “Losing thousands of dollars a year to this ‘growth tax’ is not just an obstacle, it’s a crisis. Financial institutions and service providers must play a role in calming the chaos of running a small business by eliminating these stealth charges. SMBs deserve more providers that offer transaction transparency instead of the predatory financial practices that so commonly prevent them from growing.”
The complexity of maneuvering financial operations has become an overwhelming challenge for SMBs, with 60% of business owners describing the process as more chaotic than ever before. For business owners already stretched thin, tracking down and understanding hidden fees only adds to the to-do list, draining valuable time and resources while straining trust. Notably, 81% of respondents that have been charged hidden fees agree they make financial providers less trustworthy.
Many businesses are fighting back by seeking alternative providers (37%), disputing charges (34%), or filing direct complaints (33%), but this takes valuable focus away from growth. For most SMBs, this lack of honesty represents more than an operational headache—it’s a roadblock to global expansion and financial stability.
“Financial transparency is a critical challenge for startups and small businesses who are looking toward international expansion,” said Saxon Baum, Partner at Florida Funders. “I’ve seen founders plan and budget months in advance, only to realize their financial runway has been cut short by unexpected costs. These range from hidden fees in wire transfers for international payments to underestimating high operational expenses.”
“During the early growth years, every penny counts,” continued Baum. “The hidden fees small businesses see in their day-to-day operations chip away at their profits and hinder development, preventing founders from investing in the people, technology, and infrastructure needed to scale globally.”
As the landscape for SMBs in the US remains uncertain, empowering leaders with the clarity they need to thrive will enable long-term success for the US SMB sector.
To read the full study, visit the Wise website here.
About Wise
Wise is a global technology company, building the best way to move and manage the world's money. With Wise Account and Wise Business, people and businesses can hold 40 currencies, move money between countries and spend money abroad. Large companies and banks use Wise technology too; an entirely new network for the world's money.
One of the world’s fastest growing, profitable tech companies, Wise launched in 2011 and is listed on the London Stock Exchange under the ticker, WISE.
In fiscal year 2024, Wise supported around 12.8 million people and businesses, processing approximately £118.5 billion in cross-border transactions, and saving customers over £1.8 billion.