Cost of running a UK business bank account

Chargebacks and disputes

• Chargeback fees: If a customer disputes a card payment, each chargeback case can cost you a fixed fee. In the UK this is typically around £15–£25 per case (and up to £150 in rare circumstances).
• Retrieval requests: Banks may charge a smaller fee (~£5–£10) to provide documentation or to reverse a fraudulent charge.
• Dispute handling: Fighting a chargeback (gathering evidence, time spent) has its own indirect costs. To reduce disputes, use clear descriptors on statements and robust fraud monitoring (no citation needed for these tips).

FX and multi-currency

• FX margin: Most banks add ~1–3% on top of the mid-market FX rate for currency conversions. By contrast, many digital-first accounts openly charge ~0.35–0.55%. Even a 2% margin means losing £200 on every £10,000 exchanged, so shopping around or using dedicated FX accounts can save thousands.
• Weekend/rare surcharges: Check for any extra fees (e.g. +1% on weekend conversions) or higher spreads on exotic currencies.
• Multi-currency IBANs: Keeping separate currency accounts prevents double conversions. For example, if you receive USD into a USD IBAN, you only pay FX when you spend or convert it—avoiding two successive markups. This can significantly cut costs for importers/exporters dealing in multiple currencies.

Plans and pricing models: tiered vs pay-as-you-go

Different businesses benefit from different pricing structures:

• Tiered subscriptions: These plans bundle a certain number of transactions in a fixed monthly fee. Ideal for high-volume users who can fully utilize the included transfers and cards. You pay a predictable fee, but risk overage charges if you exceed the tier’s limits.
• Pay-as-you-go: No (or low) monthly fee, but each transfer or service is charged individually. Better for very low-volume users who would waste money on an unused subscription. However, per-item fees can add up quickly once volume rises.
• Volume thresholds: Check the included quotas. If your volume occasionally spikes, a slightly higher-tier plan might end up cheaper than paying pay-as-you-go fees on excess transactions.
• When to switch: Track your monthly activity. If you consistently hit your plan’s free transfer limits, it’s time to upgrade. Conversely, if you regularly leave transfers unused, a cheaper tier or pay-as-you-go might save you money.

Real-world cost scenarios

Let’s compare typical monthly bills for three profiles (estimates):

• Domestic starter: (60 UK outbound, 40 inbound, 2 users, 2 cards)

A traditional bank might charge: Monthly fee (~£15) + ~£30 in transfer fees = ~£45. A typical fintech account could be around £10–£15 (low or no monthly fee + free transfers). Sends might be even cheaper (e.g. £10 with free transfers and included cards).

• Marketplace seller: (120 UK outbound, 30 SEPA payments, £20k FX, 3 users)

Traditional: £15 plan + £60 for UK transfers + £15 for SEPA + £400 in FX markups = ~£490. Fintech avg: £10 plan + mostly free GBP/SEPA + 0.5% FX (~£100) = ~£110. Sends: £5 plan + free rails + 0.35% FX (~£70) = £75.

• International trader: (50 SWIFT out, 20 SWIFT in, £150k FX, 5 users)

Traditional: £15 plan + (50×£25 SWIFT=£1250) + FX 2.43% on £150k (≈£3,645) = ~£4,910. Fintech avg: £10 plan + (50×£10 SWIFT=£500) + FX 0.5% of £150k (£750) = £1,260. Sends: £5 plan + (50×£5=£250) + 0.35% FX (£525) = £780.

These examples illustrate how high street bank costs can quickly exceed fintech fees. For instance, a £50k transfer costing ~2.43% in hidden FX fees means £1,215 lost to the bank on currency spread alone.

How to reduce your total cost

• Choose the right plan: Match your monthly plan to your volume mix. Don’t overpay for unused quotas or pay per-transfer when a small subscription would save money.
• Use appropriate rails: Batch low-urgency GBP payments via BACS; reserve same-day CHAPS for only high-value needs. For EU suppliers, use SEPA; for global suppliers, avoid multiple FX hops.
• Leverage multicurrency accounts: Hold euros/dollars in dedicated IBANs to skip extra conversions. Convert currencies only when you need to.
• Set card controls: Limit card privileges and use strong fraud controls to prevent unauthorized transactions and chargebacks.
• Monitor usage: Watch your monthly limits. If you consistently exceed them, upgrade before overage fees kick in; if you’re under-using, downgrade to a lower tier.

FAQs

What is the average monthly cost to run a UK business account?
It varies widely. A very basic, low-usage account might cost only a few pounds a month (especially with fintechs offering free tiers), while a higher-volume SME might pay £50–£100 or more once fees and FX spreads are included.

Which fees impact exporters and importers the most?
Typically foreign-currency-related fees dominate. That means FX markups (on both incoming and outgoing currency conversions) and international transfer fees (SWIFT or SEPA costs). Per-transfer charges play a role too, but for large exporters/importers FX spreads usually exceed fixed transfer fees.

Are incoming international transfers really free?
Often, yes for euro transfers via SEPA: most UK accounts treat inbound SEPA like a local payment, so it’s free. But SWIFT (USD or other currency) transfers are usually not free – banks may charge a fee or keep part of the payment for themselves on inbound SWIFT credits.

How do FX margins compare to per-transfer fees?
For large transactions, FX margins can dwarf fixed fees. For example, a 2% FX spread on £100k is £2,000 – far more than the £20 flat fee for a same-day transfer. Fintech providers tend to have low, transparent FX fees (often <0.5%) that can result in lower total cost than high per-transfer fees at banks.