Bitcoin ATM Fees

[phillipsjk]

Cross-posting an idea I posted in another thread.

Imagine a Bitcoin "ATM" manufacturer researched the MSB requirements in their area. Generally, you are not considered a MSB if you do not move enough money to make a business out of it. Say the limit is $500/day or $10,000/quarter.

You can then set up a machine that sets fees based on how close it is to exceeding those limits. The percentage can even vary within the same session with the user: depending how much of the daily limit they want to withdrawal.

While one machine with such low limits would be useless; you would likely be able to find a working machine if just about every business had one for side-revenue.

Edit: I may have just re-invented localbitcoins

[Cream]

I might not have to use btc atm in future so I don't worry about fees xD

[itsAj]

Agree with this about it not being an ATM, I hate that these types of things are called ATMs but you can't SELL your Bitcoin to get fiat.

I think it's odd to get so hung up on this, but it's certainly a common point of contention.

If it is a two way ATM, you are a money service business. If it is one way, you are more like a precious metal dealer (still subject to regulation, but it may be less stringent).

I could not use my local robocoin ATM because they require me to have a cell-phone. They also require a government ID scan and handprint.

Traditional banks issue you their own identifying card after doing identification in an office setting. This means you don't have to submit documents every time you make a transaction.

I don't think the fact that an ATM only sells BTC would make them not be a MSB. The fact that the ATM is exchanging cash for a cash like product is generally what would make them subject to MSB regulations. I may be incorrect on this but this is my understanding.

[Swordsoffreedom]

Agree with this about it not being an ATM, I hate that these types of things are called ATMs but you can't SELL your Bitcoin to get fiat.

I think it's odd to get so hung up on this, but it's certainly a common point of contention.

If it is a two way ATM, you are a money service business. If it is one way, you are more like a precious metal dealer (still subject to regulation, but it may be less stringent).

I could not use my local robocoin ATM because they require me to have a cell-phone. They also require a government ID scan and handprint.

Traditional banks issue you their own identifying card after doing identification in an office setting. This means you don't have to submit documents every time you make a transaction.

I don't think the fact that an ATM only sells BTC would make them not be a MSB. The fact that the ATM is exchanging cash for a cash like product is generally what would make them subject to MSB regulations. I may be incorrect on this but this is my understanding.

Well in my opinion Canada's ATM's one way or two way have to comply with MSB requirements
http://www.mnp.ca/en/media-centre/news/2014/6/24/canada-implements-first-bitcoin-legislation

On June 19, Canada gave Royal Assent to Bill C-31, An Act to Implement Certain Provisions of the Budget Tabled in Parliament on February 11, 2014 and Other Measures. The bill includes provisions on virtual currencies like Bitcoin, requiring similar reporting and regulatory standards applied by traditional financial markets. The new law regulates Bitcoin as a “money service business” and specifically addresses dealers in virtual currencies. It is expected to cover Bitcoin exchanges and ATMs.

The amendments make Bitcoin and all digital currencies subject to the requirements currently applicable to money services businesses. Bitcoin exchanges will now be required to register with FINTRAC, report suspicious and other transactions, keep certain records, implement compliance plans, and determine if any of their customers are “politically exposed persons.” Bill C-31 applies to Bitcoin companies that have a place of business in Canada and outside Canada, who direct services at persons or entities in Canada.

“This is intended for external Bitcoin companies doing business in Canada who will have to comply with Canada’s anti-money laundering legislation,” said Christine Duhaime, a senior financial crime advisor with MNP LLP. “Part of the concern with such laws is whether they strike a balance between combating financial crime and supporting innovative technology development. The concern is that venture capital for Bitcoin start-ups may dry up if legislative obligations prove to be too onerous or expensive. But this legislation is an important step forward.”

Since they mentioned ATM's should impact it as well.

[itsAj]

Agree with this about it not being an ATM, I hate that these types of things are called ATMs but you can't SELL your Bitcoin to get fiat.

I think it's odd to get so hung up on this, but it's certainly a common point of contention.

If it is a two way ATM, you are a money service business. If it is one way, you are more like a precious metal dealer (still subject to regulation, but it may be less stringent).

I could not use my local robocoin ATM because they require me to have a cell-phone. They also require a government ID scan and handprint.

Traditional banks issue you their own identifying card after doing identification in an office setting. This means you don't have to submit documents every time you make a transaction.

I don't think the fact that an ATM only sells BTC would make them not be a MSB. The fact that the ATM is exchanging cash for a cash like product is generally what would make them subject to MSB regulations. I may be incorrect on this but this is my understanding.

Well in my opinion Canada's ATM's one way or two way have to comply with MSB requirements
http://www.mnp.ca/en/media-centre/news/2014/6/24/canada-implements-first-bitcoin-legislation

On June 19, Canada gave Royal Assent to Bill C-31, An Act to Implement Certain Provisions of the Budget Tabled in Parliament on February 11, 2014 and Other Measures. The bill includes provisions on virtual currencies like Bitcoin, requiring similar reporting and regulatory standards applied by traditional financial markets. The new law regulates Bitcoin as a “money service business” and specifically addresses dealers in virtual currencies. It is expected to cover Bitcoin exchanges and ATMs.

The amendments make Bitcoin and all digital currencies subject to the requirements currently applicable to money services businesses. Bitcoin exchanges will now be required to register with FINTRAC, report suspicious and other transactions, keep certain records, implement compliance plans, and determine if any of their customers are “politically exposed persons.” Bill C-31 applies to Bitcoin companies that have a place of business in Canada and outside Canada, who direct services at persons or entities in Canada.

“This is intended for external Bitcoin companies doing business in Canada who will have to comply with Canada’s anti-money laundering legislation,” said Christine Duhaime, a senior financial crime advisor with MNP LLP. “Part of the concern with such laws is whether they strike a balance between combating financial crime and supporting innovative technology development. The concern is that venture capital for Bitcoin start-ups may dry up if legislative obligations prove to be too onerous or expensive. But this legislation is an important step forward.”

Since they mentioned ATM's should impact it as well.

I think the regulatory environment in Canada is especially troubling. I have heard rumors that the reason that Just Dice closed down was because of the new Canadian regulations.

[CoinATMRadar]

For adding the Bitcoin ATM ROI calculator on my site, I've looked at the average rate across all Bitcoin ATM machines in the world (for which the rates are available) and it was 5.2%. So 5% is something on average the market uses at the moment.

As a customer I find the rate 3-4% is fair at the moment. My bank charges me 3% mark up to get cash from their ATM in a currency different from the currency of the account, and this is one of the biggest banks. So if the rate of Bitcoin ATM is about the same - then it totally makes sense.

The other thing, how long it will take to make it profitable (you can check the calculator above for this). But with mass adoption the volume should increase and make it more easier to get return on investment earlier, even with smaller rates, so I think it will decrease over time to maybe 3% on average.

[FloodZone]

Imo Bitcoin ATM should not took a fee. The fee is a worst thing you can even imagine!

[CoinATMRadar]

Imo Bitcoin ATM should not took a fee.

This is a business first of all, so your opinion is rather strange. I think everybody will appreciate if you purchase the Bitcoin ATM and install it for free usage. But something tells me, you're not going to do this.

[bigasic]

I think this has a chance where its difficult to purchase bitcoins, here in the usa, its pretty easy, especially with coinbase, but they only buy/sell here in the usa, so I see it working where its difficult to purchase coins. Also, the only place that I see them working is in airports, where you can reach more people from more cultures.

Also, you will start seeing pawn shops start selling/buying coins. If you make the transaction right there, you may have to get fincen reguated, but I dont think you need to get all the regulations that are needed for an atm. im not 100 percent sure on this, but since bitcoin isn't considered money, i believe its the same as buying/selling gold or silver so you only have to report over a certain amount.

(could be wrong, but thats my undertsanding)

[peeveepee]

Bitcoin ATM competitors are dealers on localbitcoin.

Hard to see people paying higher fee on ATM than from local dealer.

[CozyLife]

I'd say the fees should be about the same as an exchange, but you could up them a bit and get away with it as you won't be exchanging as high of a volume as exchanges do. You'll also be providing a different kind of convenience, so that could allow you to raise the fees a bit. 0.5% seems about right. In order to ensure you have enough business, perhaps make the minimum fee the equivalent of $1.00. This way people don't create lots of dust transactions as well.

[wasserman99]

I think this has a chance where its difficult to purchase bitcoins, here in the usa, its pretty easy, especially with coinbase, but they only buy/sell here in the usa, so I see it working where its difficult to purchase coins. Also, the only place that I see them working is in airports, where you can reach more people from more cultures.

I don't think it is all that easy to buy bitcoin in the US. You need to complete the KYC process which generally can be very intrusive and can take at least a week or so but sometimes longer.

Buying BTC also generally involves a bank account, but if you are unbanked then the cost to get money to an exchange will go way up, probably to the extent that buying at an ATM is actually cheaper.

[Swordsoffreedom]

I think the right fee is between 0.2 and 0.5%, with a minimum of 1$

The question though is how to make a business from that after compliance costs, and renting the space in a building.
Although a flat fiat rate fee might be convenient if enough people are willing to use the machine
But for now until scale gets there I think 3 to 5% will be more closer to the real fee.