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Bitcoin - Figures on transaction cost

Here are some figures on transaction costs in cross-border transactions.

Currently the de-facto reference currency in cross-border transactions is the USD.

A recent purchase of USD186 using the credit card resulted in the following line items in AUD:
  • AUD (from USD) - $202.00
  • Currency conversion assessment fee: $0.40
  • International transaction fee: $3.00
  • Cross border assessment fee: $1.60
Ignoring the spread used in the currency conversion, the transaction cost is about 2.5%. The actual transaction cost taking the spread into account is probably about 3+%

A recent purchase of USD700 using PayPal incurred a fee of $23 (buyer or seller pays). The transaction cost is a whooping 3.3%. I happened to have some USD in my account, so I didn't need to perform currency conversion. PayPal's spread in forex rate is notoriously poor compared to other avenues.

A purchase of 1.45BTC (approximately USD1085 at that time) incurred a transaction fee of 0.0002BTC, which is negligible. Speed rivals that of PayPal. Again, I happened to have some BTC lying around, otherwise conversion from fiat to BTC will incur additional charges, typically in the 2% range.

So if BTC (or some other crypto-currency) replaces USD as the de-facto reference currency for transaction, it should drastically lower the transaction cost. However, the price volatility of BTC is one factor that prevents this from happening. BTC needs to be relatively stable against other currencies before it will be widely adopted for cross-border transactions.


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