February 26, 2020
Have you ever bought currency at the airport? Then most probably you've got an unfair exchange rate conversion. Most claim 0% commission fee, while the actual charge is hidden in the exchange rate and you have to accept a deal in the range of 5-10% commission. This is a common practice and the first company that managed to communicate the message right in the online industry was Transferwise.
We've did a competitive research on the current market conditions and how other vendors are structuring their offering. We've came across several practices that ring a bell.
You are being told that crypto payment processing would cost you 0.5-1.0% fee. However this includes only the processing with no real conversion into something stable. In the end you can end up with many different coins that you don't know the actual value of and taking Bitcoin price ups and downs, you can't really evaluate if you made any money and what your actual margin of your product/services is. Then you get another 2-3% for exchange to something stable like EUR or USDT. And if you would like to convert it back to crypto so you can send payment to someone in crypto, you need to pay another 2-3% for the exchange. So you end up at 4.5% in the best case. Now lets include the indirect pricing that doesn't directly affect your money, but it affects your customers big time.
What we've seen on the market is that most vendors don't directly show your customers the exchange rate they offer, but just the amount in crypto that is required for a specific deposit amount. You know how hard you need to fight for your customers and you also know that they are not stupid. A quick Google search could give them the current exchange rate of any coin. Even their wallets show them what the current value is.
Let's take an example: • Your customer wants to receive €1000 on your website • Selects Bitcoin as a payment method • The current BTC/EUR rate → €7200 e.g. the user has to transfer 0.13889 BTC • Instead the crypto processor offers a worse rate at €7100 (not shown) so the user is asked to send 0.14084 BTC and without even knowing, your customer got secretly charged €14.04
Another example with XRP is even more damaging: • Your player wants to receive €1000 on your website • Selects XRP as a payment method • The current XRP/EUR rate → €0.23 e.g. the user has to transfer 4347 XRP • The crypto processor offers a rate at €0.220 so the user has to send 4545 XRP so here even with €0.01 difference your player got secretly charged €45.5
We came across lots of reviews and forums where customers willing to use the crypto payment method complain about the unfair conditions offered by the processor. This alone ruins your company reputation and pushes new customers away.
If you are considering a crypto payment processor or already have one, try out a demo payment. Choose an amount say in USD or EUR and check how much you need to pay in cryptocurrency to get it. Then compare the rates with some of the well established providers (Kraken, Coinbase or simply do a quick Google search)
At Finrax we believe that the mid-market rate is the only rate your customers care about. Therefore we strive to communicate this message with you. We are committed to bring transparency in the crypto payment industry and we always show you everything upfront. Here you can play around with 50+ cryptocurrencies paired with 30+ fiat currencies. Alternatively click here and try out our checkout experience.