Do you have a small business in New York? You could be losing money without knowing it.
That is the panorama that thousands of small and medium -sized companies (SMEs) in New York face, where hidden rates are costing millions of dollars a year. Although these entrepreneurs are one of the most vibrant pillars in the local economy, they face invisible obstacles that put their profitability and future at risk. A new Wise report, in collaboration with the Center for Economic and Business Research (CEBR), reveals that SMEs – many of them owned by Latinos – are paying a silent price for operating in sectors such as construction, transportation and hospitality.
To better understand this phenomenon, we talked with Joshua Contreras, Global Manager of Wise Digital Communities and Campaigns, who warns that these invisible commissions are affecting the profitability and growth of small entrepreneurs.
The report reveals that these rates cost US SMEs 171 billion dollars a year, and Latin businesses are among the most affected, especially in states like New York, where the presence of Latin businessmen is high.
“Small Latin businesses in New York are particularly exposed to hidden rates due to their strong representation in highly impacted sectors, such as construction, transport and hospitality,” Contreras explained.
In New York alone, SMEs pay more than 19 billion dollars a year in hidden rates, a figure that represents one of the highest average costs per company throughout the country. For many Latin entrepreneurs who already face barriers such as limited access to credit or digital tools, this invisible expense can jeopardize the daily operation of the business.
“These rates affect the ability of SMEs to plan their cash flow, investigate or even pay their employees and suppliers in time,” adds Contreras. “When the margins are adjusted, as is often the case in small or family businesses, every dollar counts.”
Most affected sectors
According to the report, the most beaten sectors in New York coincide with those where there is greater Latin representation:
Construction: 25% of the companies in the sector are Latin.
Transportation and logistics: 20% of companies are Latin.
Food and hospitality: 14% of companies are Latin.
“These sectors are characterized by frequent operations, multiple payments to suppliers and, in many cases, international transactions. This exposes them to commissions for payment processing, exchange of currencies and even bank transfers that are not always visible to the business owner,” says Contreras.
In addition, when operating in high pressure environments, many entrepreneurs prioritize the speed in payments, which can lead them to accept services with additional charges without knowing it.
Impact on profitability
In a city like New York, with high operating costs, hidden rates can further aggravate the financial situation of Latin SMEs.
“Unexpected charges can affect payroll payment or inventory replacement. In some cases, 18.5% of companies claim that hidden rates have led them to operate in loss,” says Contreras.
This adds to the lack of access to financial advice and the administrative burden faced by many Latin owners.
Consequences by industry
In the construction sector, hidden rates appear in payments to subcontractors, international purchases or sending remittances. In transport, they are presented when paying fuel, insurance and services abroad. In hospitality, charges for credit card processing can be applied up to 29 times a month, eroding the profitability of Latin restaurants and coffee shops.
“Although the unit cost of each transaction is low, the volume makes it a financial bleeding,” says Contreras.
Strategies and tools
To mitigate these costs, Contreras suggests carefully review contracts and account states, compare suppliers and use services with transparent rates structure, such as Wise Business.
“A first strategy is to review the contracts and account states in detail, especially those of financial services and card payments. Many times, businesses do not know that they can negotiate lower rates or change supplier for a more transparent one.”
In addition, the use of financial technology, accounting software and specialized education can make a significant difference.
“The first step is financial consciousness. Many entrepreneurs do not know that the exchange rate used by their bank includes a hidden margin,” he says. “This transparency helps to plan better and avoid surprises at the end of the month.”
Resources in New York
Finally, Contreras points out that New York has multiple organizations dedicated to supporting diverse SMEs. Combining technology, financial education and local support networks, Latin entrepreneurs can improve the financial health of their businesses and reduce the impact of these invisible rates.
