Moneff executive says SME FX margins are exposed to bank spreads

Moneff executive Bakhtiyor Aliev said SME FX margins can be materially eroded by currency swings, bank markups and repeated conversions in cross-border trade. In an opinion published by Finextra, the London-based co-founder and chief commercial officer argued that smaller firms lack the treasury resources used by multinationals to manage foreign-exchange risk.

Aliev said the pressure is most visible for online merchants and mid-market finance teams that buy and sell across borders. He gave the example of a UK e-commerce company sourcing goods from Europe: if the euro rises 3% to 4% before a supplier invoice is paid, a business operating on a 10% net margin could see a large share of profit on that shipment absorbed by the adverse move.

The argument reflects a common operational problem for firms that invoice, collect and pay in different currencies. Currency risk is not limited to market volatility. According to Aliev, the cost also comes from the way traditional banks price foreign-exchange transactions for corporate clients.

What is the mid-market rate in SME FX?

The mid-market rate is the midpoint between the buy and sell prices quoted in global currency markets. Aliev described it as the benchmark that businesses should use to assess whether their bank or payments provider is adding a spread to the exchange rate offered.

He said banks often do not pass that rate on to SMEs, instead adding a spread that can range from 1% to 4% above the mid-market level. In his example, a company moving £500,000 a year across borders would lose £15,000 if it paid a 3% hidden markup through an inflated exchange rate.

Aliev also cautioned that “zero fee” international transfers may still carry costs if the provider earns revenue through the exchange rate rather than a separate charge. The relevant comparison for a finance team, in his view, is the total currency outcome against the mid-market rate, rather than the transfer fee shown on the payment screen.

How do multi-currency accounts help SME FX margins?

Multi-currency accounts allow a business to receive, hold and pay in more than one currency. Aliev said that structure can reduce forced conversions, where foreign receipts are automatically exchanged into a home currency and later converted again to pay suppliers.

He described a merchant selling into Germany, Denmark and Sweden, receiving euros, Danish kroner and Swedish krona. Under a traditional domestic banking setup, those receipts may be converted into sterling on arrival, with a markup applied, and then converted back into euros when the company pays a European supplier.

Holding foreign-currency balances can create what Aliev called natural hedging. If a company receives euros from customers and later has euro-denominated supplier bills or software costs, it can use the same euro balance for payment and avoid an additional FX transaction.

Aliev said Moneff has built its platform to give mid-market businesses access to competitive FX rates and the ability to manage currencies including sterling, euros, Danish kroner and Swedish krona through one interface. The claim is part of Moneff’s commercial positioning, and Aliev framed the broader issue as an infrastructure choice rather than a forecast about where currencies will move next.

This story draws on original reporting from Finextra Research.