Fixed rates vs Floating rates

March 9 2021

When creating a one-time payment link, Finrax allows you to select two exchange rate types - floating and fixed. Fixed rates are more suitable for businesses that don't want to deal with any of the risks associated with volatility, whereas floating rates ensure that each incoming deposit is exchanged at the most recent and fairest rate. Currently, you can select the payment rate type when creating the payment link via API by setting the rateType field.

Fixed rates - zero volatility

If you create a one-time payment link with a fixed rate type, when the end-payer opens the checkout page and selects their desired cryptocurrency, the rate, displayed on the screen, will be fixed for a certain timeframe:

The time which the rate is fixed for is 10 minutes more than the expiration time of the payment. However, it is capped at 40 minutes. Let's look at the following example - say, the payment link is created with an expiration time of 10 minutes. Once the end-payer deposits within the next 20 minutes, we will apply the initial fixed rate. However, If the payment link is created with an expiration time of 2 hours, only a deposit made within the first 40 minutes is going to be exchanged at the fixed rate. If the end-payer deposits after, let's say, an hour, the rate will be taken again at the time of depositing and the initially fixed one will be ignored. Fixed rates are perfect when you don't want to experience the burden of the ever-volatile cryptocurrencies. Let's take a look at the following Dashboard deposit example:

We see that the payer has selected their preferred deposit currency and sent the requested amount of 0.00157343 BTC. The initial fixed rate has been respected and the deposit has been denominated to the expected 30 EUR (before fee). Please note, that had the payer deposited half of the requested amount in BTC, the fixed rate would still have been respected, however, the denominated amount would be 15 EUR in this case. Fixed rate is available for the following cryptocurrencies: BTC, ETH, XRP, LTC, BCH, USDT, USDC

Floating rates

In case your business and your end-users are both perfectly fine with the volatility around cryptocurrencies, you can create one-time payment links with a floating rate type. After selecting the preferred cryptocurrency, the payer is presented with an amount and a crypto address, and the exchange rate is not fixed in this case. When a transfer is made against the crypto address, Finrax will take the most recent rate (which might be more or less than the initially displayed one) and exchange the transfer at that rate. In the following example, the payer sees the requested amount of 0.00516763 BTC is equal to 100 EUR:

When the deposit is received, Finrax will take the most recent exchange rate and as shown by the example below we can see the rate has gone down by a very small margin, resulting in the deposit amount being denominated to 98.90 EUR, instead of the initial 100 EUR value.