More than half of UK businesses trading internationally have scaled back overseas growth plans this year because of problems associated with cross-border payments, according to research commissioned by Airwallex.
The UK analysis of the Global Growth Tariff study, produced with the Centre for Economics and Business Research, found that 55% of respondents had reduced international expansion plans. The research estimates that inefficiencies in cross-border business-to-business payments tie up £10.5bn of working capital across the UK economy each year.
British respondents reported an average annual cost of £411,000 from payment friction, covering staff time, additional charges, foreign-exchange costs, delays and missed trading opportunities. The equivalent estimates in the research were £230,000 in Germany, £211,000 in the Netherlands and £138,000 in France.
The study also found that UK cross-border payments cost 19% more than domestic payments, compared with an EU average of 15%. More than half of UK respondents — 53% — said payment friction was putting their businesses at a competitive disadvantage.
Liam Daly, senior economist at Cebr, said: “These figures point to a structural disadvantage for UK exporters.”
The findings need to be considered in the context of a report commissioned by a payments company with a commercial interest in businesses changing financial infrastructure. The underlying operational problems are nevertheless familiar to companies trading across several markets, particularly where finance teams have to manage different currencies, banking relationships and compliance requirements.
Payment failure is one area where scale appears to matter. The research found that 48% of payments made by smaller businesses fail straight-through processing, compared with 29% for large companies. A failure means a transaction requires manual intervention rather than progressing automatically through settlement.
Repeated exceptions consume staff time and can affect cash forecasting. UK businesses in the study reported spending an average of eight hours each week resolving payment problems — equivalent to more than a working day that finance employees cannot spend on other activity.
For businesses with tight working-capital positions, settlement delays can have wider operational effects. Suppliers may require funds before releasing inventory, while customers can expect payments or refunds on defined schedules. Uncertainty over timing can therefore influence how much cash a company keeps in reserve.
Cross-border payments remain inherently more complicated than domestic transfers because transactions can involve currency conversion, correspondent banks, local payment rails and differing anti-money-laundering requirements. UK companies trading heavily with eurozone countries also operate outside the common currency, exposing them to conversion costs that many continental competitors avoid on intra-eurozone transactions.
The research suggests companies are already responding. Two-thirds of respondents said they plan to change their payments operations, while 26% intend to move some payment volumes away from traditional banks and providers.
Asked how recovered costs might be used, 44% pointed to product and technology development, 33% to marketing and sales, 31% to additional international markets and 24% to hiring. Those responses underline the connection between apparently administrative finance processes and wider investment decisions.
Payments are only one factor determining whether a company expands overseas. Demand, tariffs, regulation, logistics, financing and local competition can have much larger effects than transfer costs. The £10.5bn estimate should therefore not be read as capital that would automatically translate into equivalent additional exports if payment systems changed.
The figures do, however, show why payments infrastructure is becoming part of international operating strategy rather than simply a treasury function. As smaller companies sell into more markets and digital commerce compresses transaction times, businesses have less tolerance for financial systems that create unexpected fees, manual work or unpredictable settlement.
The competitive question is increasingly whether companies can move money internationally with the same visibility they expect from domestic digital systems. For UK exporters working across currencies, closing that gap can release management time and working capital even where the larger economic obstacles to international expansion remain.
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