One of the key arguments that bitcoin critics present against the biggest cryptocurrency is its high transaction fee. However, a recent data from Bank of America (BoA) shows that traditional fiat transfers cost 6000 times as much.
Domestic US institutions including BoA, uses FedWire, Federal Reserve’s money transfer network that charges them a maximum of 83 cents to process a payment. According to its public figures, BoA charges customers themselves up to $45 for the same service. According to the size of payment involved and whether it qualifies for an “incentive” fee, described as “transfers that exceed 60% of a customer’s historic benchmark volume.” the FedWire fee varies.
The fee payable by banks themselves can be as low as $0.032 for an “incentive” transfer worth over $90,000. BoA charges at least $30 for a transfer, meaning its minimum profit margin is 87.2 percent. Imperfect exchange rates for foreign transfers subsequently incur further charges to the customer.
On the contrary, the recommended Bitcoin fee from Earn.com which would deliver the quickest settlement relative to fee paid was 8 satoshis per byte on September 19. This translates to around 75 cents for a $90,000 transaction.
However, the fees remain a big worry for both consumers and merchants using Bitcoin despite the average cost decreasing significantly in 2018 to record lows. The businesses who opted not to add support for SegWit – a protocol allowing for faster and quicker transactions – have faced a backlash from clients and commentators alike.
One of the cryptocurrency ecosystem’s oldest merchant payment processors, BitPay has seen open source alternatives publicly resolve to make it “obsolete” after high fees additionally combined with poor performance. The US’ largest exchange and wallet provider, Coinbase, had contended with similar threats prior to introducing SegWit functionality in February.