The Biden Administration, Consumer Financial Protection Bureau (CFPB), and Federal Trade Commission (FTC) have recently proposed new rules to crack down on junk fees. This hodge-podge category of hidden charges renders goods and services—from concert tickets, to hotel rooms, to ATM withdrawals—more expensive through illegible means.

“Over the years, large banks and their consultants have concocted new junk fees for fake services that cost almost nothing to deliver,” CFPB Director Rohit Chopra said in January when proposing new rules to stop junk fees on bank accounts. “Banks should be competing to provide better products at lower costs, not innovating to impose extra fees for no value.”

Notably, politicians and regulators have been wont to frame junk fee crackdowns as a form of economic justice—if not populism. 

“Junk fees may not matter to the very wealthy, but they matter to most folks in homes like the one I grew up in,” President Biden said in October, mentioning that these fees can add up to hundreds of dollars a month.

That class-stratifying framing makes sense if junk fees extend to overdraft fees, consumer purchases, and other relatively domestic categories of spending. But junk fees do matter to the very wealthy—as well as others—if we define exploitative exchange rates as a kind of junk fee, suggests Rina Wulfing, Senior Policy Lead for North America at Wise, the London-based international-payments platform. Wealthy consumers who travel abroad often encounter this kind of junk fee in the form of disadvantageous exchange rates that banks and credit card companies can use to profit off international payments.

“There is a very large demographic that sends money abroad [in the US but] that’s less than you’re going to see in, for example, the European Union, where by nature your life is very international,” Wulfing said in an interview with The Financial Revolutionist. “For the headlines, it would make sense to me why the Biden Administration wasn’t very focused on this demographic.”

By focusing on Swifties instead of SWIFT-ies, the Biden Administration has underemphasized how exchange rate markups affect everyday people, not just wealthy tourists—deleteriously affecting small businesses, consumers who send remittances abroad, as well as servicemembers—amounting to a whopping $5.8B in lost value last year.

In January, Wise published its Wise Junk Fees Report, the result of a 2,000-person survey conducted in partnership with Morning Consult. The report suggests that consumers are acutely aware of junk fees’ impact on their financial wellbeing, influencing the financial institutions they work with—as well as the politicians they endorse. Notably, 81% of respondents said they considered unfair exchange rates as a junk fee. 

(It may be worth taking these statistics with a grain of salt: reflective of general sentiment, perhaps, but not necessarily everyday individual practices or population-level parameters. For instance, when asked, In looking at upcoming elections, how important is the issue of "junk fees" to you when determining a candidate to support and/or vote for? 74% of respondents said they would consider a politician’s junk-fee policies—arguably an overestimation in today’s notably fractured political climate, which faces contentious voter issues and divisive political figures. Furthermore, while Wise’s political efforts may be largely mission-driven, the elimination of exchange rate markups would also presumably benefit Wise’s standing in the market.) 

Although the Biden Administration may have focused its junk-fee rhetoric on more domestic use cases, the CFPB has focused on international payments in addition to domestic ones. A spokesperson for the CFPB told The FInancial Revolutionist that, since 2012’s Remittance Rule, the CFPB has required remittance transfer providers to disclose to consumers the fees they charge on transfers, the exchange rate applied to the transfer, the amount of currency the recipient will receive, as well as other details.

“As an enforcer of the Remittance Rule and Dodd-Frank’s prohibition on unfair, deceptive, and abusive acts or practices, the CFPB is concerned about hidden fees applied to remittance transfers, including where a provider engages in deceptive practices about the cost (and speed) of sending a remittance,” the spokesperson said.

The CFPB most recently demonstrated its enforcement of these rules in October 2023 when it ordered Chime Inc., which operates the international money transfer platform Sendwave, to refund customers nearly $1.5M in fees and contribute $1.5M to the CFPB’s victims relief fund. Chime misrepresented the cost of sending money from the US to Nigeria by charging fees while claiming that the transfers would involve “no fees,” the CFPB alleges. 

Wise’s Wulfing said it was encouraging to see CFPB Director Chopra “evolve his language” on the issue by categorizing exchange rate markups as a junk fee. Chopra and the CFPB have been more explicit in their thoughts on exchange rate markups since the CFPB put out a request for information (RFI) on junk fees, Wulfing said, which saw textured responses from consumer groups and individual consumers. However, a CFPB-led RFI focused on international payments and junk fees, or best practices guidelines by the CFPB, could take things even further—translating internal definitions into more material outcomes and encouraging international payments providers to change their fee structures and practices in favor of consumer wellbeing. 

The fintech’s lobbying efforts have focused on consumers as well as small businesses, which lack a designated financial protection regulator the way consumers do. Especially if the United States returns to a White House led by former President Donald Trump, Wulfing, who is a registered lobbyist, said Wise will emphasize the effect of exchange rate markups on US competitiveness, in addition to these fees’ effects on servicemembers. 

“Servicemembers lose hundreds of millions of dollars in fees every year, and people love that on both sides of the aisle,” Wulfing said. “Maybe our messaging is tweaked, but the end goal remains the same.”

Looming above these discussions—in addition to the potentially antidemocratic and economically harmful implications of a second Trump White House—is the existential future of the CFPB. The regulatory vacuum may force the executive branch of any administration to institute many of the rulings already in place: a slightly weaker CFPB cloaked in deregulatory garb. 

But the fate of international payments doesn’t rest squarely in uncertain American hands. The G20 Cross Border Payments Roadmap as well as the IMF and World Bank Approach to Cross Border Assistance offer a roadmap for how these payments platforms will have to operate in the coming years—to some extent independently of US regulatory concerns.