Friction Costs: A Hidden Drain on Profits

In today’s banking landscape, every financial transaction carries a hidden layer of friction. Because each bank operates as a separate entity with limited mutual trust, funds must often pass through third-party clearinghouses to reach their destination. While this structure helps ensure security, it introduces complex and layered fee mechanisms. Businesses must absorb fixed fees, percentage charges, and intermediary costs, as well as hidden foreign-exchange losses. This is especially pronounced in cross-border payments, where currency conversion fees, bank processing charges, and card network fees stack on top of each other. The result is an opaque and unpredictable cost structure that makes accurate forecasting difficult and gradually eats into corporate margins, becoming a significant barrier to global business growth.