Don’t mistake a Transparency Issue for a Retention Issue

FX and Float: Operator Note

If a B2B payments company is facing customer churn, this is how the story usually plays out – though nobody tells it this way:

A business is looking for payment providers. They check the fees listed on the pricing page and compare two or three alternatives. They find the option they find competitive, and sign up. They use the product, and it works well. Things are fine for six months, or maybe a year.

Then something changes. Maybe a new FP&A hire runs a reconciliation. Maybe the Finance Head looks at a quarter’s transactions and compares the FX rates they received with the mid-market rates for those days. They add up the spread and factor in the settlement time. They work out what the company actually paid per transaction, all in.

This number is not what they thought they were paying. The stated fee was 0.5%. The real cost, after including the FX markup and the float, is closer to 1.5%. At a million dollars in monthly volume, that is a difference of $120,000 per year.

This customer is now lost. This does not mean they stop using the product immediately. That may take a month or a quarter, but the customer has been lost. The company will mark it as churn, diagnose it as a retention problem, and respond with the usual playbook: assign an account manager, offer a discount, and schedule a monthly call for review. But none of it will work.

It will not work because the customer is not leaving over price. They are leaving because they feel they were misled. These are two completely different issues, and they require completely different responses.

A price problem is rational. The customer has done the comparison, found someone cheaper, and is making an economic decision. You can fight this with a better offer. You can add value somewhere else. The customer is still at the table, having a commercial discussion with you.

A trust problem is different. The customer believed something to be true, but discovered it was not. They are now re-evaluating everything you have ever told them. The account manager is no longer a partner; they are a representative of the company that misled them. The monthly meeting is no longer a growth or collaborative conversation; it is a confrontation.

The payments industry has a structural reason for this pattern. Payment pricing comprises five components stacked together: the stated fee, the FX markup, the float, the corridor cost, and interchange (as we discussed in Memo #1). The customer sees the first one, while the rest are hidden. The longer a customer pays the hidden price without knowing it, the larger the gap becomes between what they believed and what was true.

Wise has proven that transparency in consumer payments can give you a competitive edge. They made their FX markup visible. They showed customers the mid-market rate and their markup as a separate line item. This single design decision turned an opaque industry into one where consumers could clearly see what they were actually paying.

Once customers experience that level of transparency, they do not go back. The expectation moves in only one direction – towards higher transparency. And the business customers making cross-border payments are the same people who use Wise and Revolut in their personal lives. They already know what transparency looks like. They will eventually demand it from their B2B providers too.

The B2B market has not had its Wise moment. Business customers are still discovering their real costs through reconciliation, not through the product. The company that changes this will build a moat that is very difficult to breach. A customer who already knows exactly what they pay has no gap left to discover. There is no surprise discovery to be made.

If you are running a B2B payments company and your churn analysis says that customers are leaving for better pricing, go back and look at the data more carefully. Ask when the customer started the switching process. Ask what happened in the weeks before. Most likely, you will find a moment of discovery that led someone to ask a pricing question no one had asked before.

The companies still hiding the FX spread will keep losing customers and keep calling it a retention problem. It is the inevitable consequence of a pricing structure that depends on customers not doing the maths. The churn is not a customer success problem; it is a transparency debt. And like all debts, it has to be eventually paid.