How do merchant services make a profit?

[lomalio]

Ok noobish question ....

Services like Bitpay and Coinbase need to use banks to exchange fiat for bitcoins. So the merchants can save money by using Bitcoin, but then the services need to transact with customers using those exact banks that the merchants avoided. So it seems like the burden is just shifted one place.

Can anyone explain please ?

[jonald_fyookball]

they can charge fees, and there is also a spread which they benefit from as market maker.

[lomalio]

they can charge fees, and there is also a spread which they benefit from as market maker.

The merchant must cover those costs? Does the customer also cover them?

The question is: Do the banks end up with the same profits from all this?

[jonald_fyookball]

they can charge fees, and there is also a spread which they benefit from as market maker.

The merchant must cover those costs? Does the customer also cover them?

The question is: Do the banks end up with the same profits from all this?

say the current buy price is =$521 and sell price is $520 on coinbase.
if you're a merchant and you sell an item for 1 Btc , and use coinbase merchant
service, you would get $520 in your bank account.  coinbase then sells your 1 btc
for $521 to someone else and profits for $1.  so in effect you as a merchant are covering the cost of the spread.

[lomalio]

Nice answer. Thanks

[MakeBelieve]

Some simply charge cheaper to gain traffic and more income and rely on the price of Bitcoin to increase and cash out and make a profit that way a good business would probably do this for 60% of their funds.

[BTC_Fundamentals]

They can charge fees, also transaction time is faster.

[Lieji]

Indeed, they earn mainly from the bid-ask spread, exactly as jonald_fyookball described.
Unless you are having a very huge business, you essentially don't need to pay any additional fees.

https://coinbase.com/merchants

No fees for the first $1,000,000 of bitcoin payments, after that just 1% to instantly convert bitcoin to cash.

https://bitpay.com/pricing

Free Plan
$0 Forever
Unlimited processing volume

[meadefreling]

Basically, i think they charge cheaper to gain traffic and more income.Then later they monitor the trends to sell when the price is high.

[Gervais]

I wouldn't worry too much about how payment processors make their money. I'm sure they've figured out a way to provide the service whilst turning a profit. If they haven't they wouldn't be a very good business or wont operate like that for long.

[oceans]

I'm pretty sure by charging fee's that is how they make a profit. The amount of merchants that are not accepting bitcoin is a lot to be honest so they must have found a solid way to be able to make a profit otherwise they would not have started accepting in the first place. I personally feel that what matters is they are now accepting it and have found a way to make a profit which means things can only get better.

[Wafel16]

Simply,they make profit while they sell the product/service to costumers.And they use services like bitcoin to accept payment to provide the ease of access to their costumers which cuts off payment processor fees to both parties