still waiting for that bounty program....the only thing that i do not get....ANY TRANSACTION OF ANY SCALE WILL HAVE A 1.5% FEE? because if so...this fee will kill the project...or maybe i did not get that very well?
Hi @zuzuca! Bounty campaign is almost ready and will be launched soon. Regarding your question:
1. 1.5% commission fee that Merchant pays for Monetha’s payments processing and Decentralised Trust and Reputation System does include an exchange rate.
And the reason is: in the payments industry, there is no standard of having an exchange rate included into the payment processing. Exchanging to a different currency is a merchant’s prerogative and no one enforces it.
PayPal and other major payment processing companies do not include an exchange rate into it’s transaction fee. For example not only does PayPal take 2.9%-4,4% (depending on a country) + $0.3 transaction fee from the merchant, but also exchanges the currency with a bigger rate than the standard.
All of the currency exchange is being done for a separate fee. For example, VISA not only has a separate exchange rate fee (which is usually bigger than a regular exchange rate fee) but also a Dynamic Currency Conversion fee (which is normally around extra 2%) and sometimes even a foreign transaction fee (1%-5%, usually 3%) if the payment was processed abroad.
Moreover, your currency exchange is always an optional thing. You cannot and should not include it into the transaction fee.
2. Regarding the fees paid by the merchant:
For example, here is the fee schedule for one of the most popular crypto exchanges - Kraken:
https://www.kraken.com/en-us/help/fees.
If you are a merchant in Europe, the highest transaction fee that you will pay using Monetha is 0.26% when the volume is lower than 50.000. To withdraw euros via SEPA you will pay EUR 0.09.
So, let's take an example where merchant is in Europe and receives Ethereum based cryptocurrency and exchanges it to euros it would go like this: 10 - (10*0,015) - (10*0,0026) = 10 - 0.15 - 0,026 = EUR 9,824
We also acknowledge the fact, that in other cases and other countries the exchange rate might be higher.
But, you have to remember that the merchant does not only pay a transaction fee when accepting payments with traditional payment gateways. There are bunch of other fees that merchants have to pay, such as:
● Retrieval Request Fees and Chargeback Fees are paid when someone claims for a chargeback. The best-known payment gateways such as PayPal and Stripe charge merchants a USD 15 chargeback fee.
● Flat fees that include: Terminal fees to buy the needed terminal for retail merchants, PCI fees paid to Payment Card industry for compliance OR noncompliance
● Annual fees, Monthly fees, Monthly minimum fees, IRS reporting fees, network fees , etc.
● Incidental fees that consist of: Address Verification Service (AVS), Voice Authorization Fee (VAF), Batch Fee, and NFS fee.
● Marketplace fees for Alibaba, Amazon, etc for “providing and facilitating” the trust system. Think about his use case: if you are a small merchant in China, the only way to sell goods to the global world and be trusted at the same time is to join the Alibaba. You won’t need to pay a fee for a payment gateway, but Alibaba will charge you a pack of other high fees.
When combined, it calculates to a high amount of money that the merchant has to pay per year for a payment processing.
3. Regarding the business model:
As we do not include an exchange rate, here is the situation:
Monetha will charge a 1.5% transaction fee from merchants. Of that, 0.5% will go to a smart contract for the Monetha token holders and other 1% will go to the company as revenues. An interesting fact is that the average traditional payment gateways take approximately only 0.25% + 0.1 from the total fee as their revenue. This 0.25% + 0.1 is a mark-up fee to the interchange rates.
For example, if the total transaction fee that merchant is charged is 2.9% + $0.3, the 2.65%+ $0.2 is the interchange part that banks, credit card associations and others are dividing and 0.25% + $0.1 is the markup part , which payment gateways take home as a revenue.
Having this in mind, we have almost four times the rate to do business with as compared with what an average global payment gateway takes per transaction as their revenues.
