There is a line item missing from most business expense reports. It does not have a name. It does not appear on any invoice. But it shows up, quietly and consistently, every time businesses in the UK send money abroad.
It is the gap between the exchange rate your bank applies and the exchange rate that actually exists.
That gap is not an accident. It is a feature. And for years, it has been one of the most profitable features in banking.
That is starting to change.
The Problem: Hidden Costs in Every International Payment
When you send £50,000 to a supplier in Mumbai, Karachi, or Nairobi, your bank quotes you an exchange rate. It looks reasonable. It is close to what Google shows. But it is not the same.
The real exchange rate, the one banks use to trade with each other, is called the mid-market rate. What you get as a business customer is that rate plus a margin that your provider keeps. Somewhere between 2% and 4% in most cases, sometimes more.
On that £50,000 payment, a 3% margin is £1,500 gone before your supplier receives a single penny. Spread that payment over twelve times in a year, you have quietly handed over £18,000 that was never itemised, never approved, and never questioned.
And that is before correspondent banking fees, SWIFT intermediary charges, and receiving bank deductions enter the picture.
For large companies with treasury teams, this is a known cost. For the vast majority of UK businesses, it is invisible.
What the PSR Decided to Do About It
The Payment Systems Regulator is the UK body responsible for regulating payment systems and service providers. In 2024, it introduced a requirement for payment service providers to begin publishing standardised data on international transfer costs and delivery times.
The aim is straightforward: make it easier for consumers and businesses to compare providers, and put pressure on the market to compete on price rather than obscure it.
The first datasets were published in late 2024. They revealed meaningful gaps in speed and cost across providers for the same corridors. Some providers were completing transfers in under two hours, while others were taking two days to settle. Some were charging a fraction of what banks were charging for equivalent transfer values.
For UK businesses, this data does two things. It exposes how much has been overpaid historically, and it provides a framework for making better decisions going forward.
The Corridors Where Businesses Lose the Most
Not all international payments are equal in terms of hidden costs. Some corridors are more expensive to transact in than others, depending on the banking infrastructure in the receiving country, correspondent banking relationships, and currency liquidity.
Corridors that consistently attract higher markups include payments to South Asia (India, Pakistan, Bangladesh), sub-Saharan Africa (Nigeria, Kenya, Ghana), and parts of Southeast Asia. These are also some of the busiest trade corridors for UK businesses importing goods, sourcing IT services, or paying remote teams.
The same corridors where UK businesses are most active are the ones where legacy payment infrastructure is most expensive.
What Businesses Should Be Doing Now
The PSR's new rules create an opportunity that did not clearly exist before: you can now hold your payment provider accountable against published benchmarks.
There are three practical steps worth taking.
Audit your current payment costs. Pull three to six months of international transfer records and calculate the effective exchange rate applied on each transaction. Compare it to the mid-market rate on the day of each transfer. The gap is your real cost.
Understand what you are paying for. Some costs in international payments are legitimate: compliance infrastructure, FX risk management, and settlement guarantees have real operational costs. The question is whether you are paying a fair price for those things or subsidising a provider's margin.
Compare providers using PSR data. The PSR's published datasets are available and allow meaningful comparison across corridors. Use them. A regulated fintech operating on modern infrastructure will typically offer tighter FX spreads and faster settlement than a legacy bank on the same corridor.
The Bigger Picture
Cost is one part of this. But there is something more structural at play for businesses managing supplier relationships across multiple countries.
When payments arrive late or when a supplier receives less than invoiced because intermediary fees were deducted from the principal, relationships are strained. Finance teams spend time on queries and reconciliations that should not exist. Working capital planning becomes harder when settlement windows are unpredictable.
The PSR's rules address the transparency problem. The deeper fix is using infrastructure that was built for cross-border payments from the ground up, rather than domestic banking systems that process international transfers as an afterthought.
Where Leatherback Fits
Leatherback is an FCA-regulated cross-border financial infrastructure built specifically for businesses that move money across borders regularly. Competitive exchange rates, clear fee structures, and fast settlement across 21 countries mean the gap between what you send and what your supplier receives is as small as it should be.
The PSR changed the rules of disclosure. Leatherback is built to perform well under them.
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