Why is your crypto payment processing not working?
Jan 18 2020
Unfair exchange rates always push customers away
Have you ever bought currency at the airport? Then most probably you've got an unfair exchange rate conversion. Most claim they have a 0% commission fee, while the actual charge is hidden in the exchange rate and in the end you have to put up with 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 within the online industry was Transferwise.
So how does that affect my crypto payment method?
We have done a competitive research on the current market conditions and how other vendors are structuring their offering. And we have come across several practices that ring a bell.
Iceberg pricing
You are being told that crypto payment processing would cost you a 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 given Bitcoin price's ups and downs, you can't really evaluate if you have made any money and what the actual margin of your product/services is. Then you get another 2-3% in exchange for something stable like EUR or USDT. And if you would like to convert it back to crypto in order to send someone a crypto payment, you need to pay another 2-3% for the exchange. So you end up paying at 4.5% in the best-case scenario. Now let's include the indirect pricing that doesn't directly affect your money, but it has an impact on your customers big time.
Unfair exchange rates
What we have seen on the market is that most vendors don't show your customers the exchange rate they offer directly, but rather just the amount in crypto that is required for a specific deposit sum. You know how hard you need to fight for winning over your customers and you’re also aware of the fact they can do the math themselves. A quick Google search could give them the current exchange rate of any coin. Even their wallets show them what the current value is. With that in mind, let's look at the following 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 of that, 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 gets 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 a €0.01 difference your player gets secretly charged €45.5 We have come across lots of reviews and forums where customers willing to use the crypto payment method are complaining about the unfair conditions offered by the processor. This alone ruins your company's reputation and pushes new customers away.
How to evaluate fair rates?
If you are considering a crypto payment processor or already have one, try out a demo payment. Choose an amount, let's 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 firmly 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 bringing transparency within the crypto payment industry and we always show you everything in advance. Here you can take advantage of 20+ cryptocurrencies paired with 30+ fiat currencies. Alternatively, click here and try out our checkout experience.
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