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Author Topic: Bit-Pay Taking Advantage of their Payment Gateway Monopoly for ASICs?  (Read 1593 times)
Luceo
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June 25, 2012, 09:25:10 PM
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Edit: Very glad to be able to say that I was wrong. Apparently the rate I was looking at was not relevant to the BFL transactions and was for Bit-Pay shopping carts. Bit-Pay is paying full market depth for Bitcoin. Apologies if I confused anyone and rest assured I'll be using Bit-Pay for my next transaction.

Dear Bit-Pay,

We all know that in business, you have to make a profit, but as a payment processor, your profit should be primarily taken from fees on the merchant's side. You do charge these fees at 2.69%. Brilliant.

Bitcoin spot price right now is $6.31, but according to your site, you're treating each Bitcoin as just $6.04. This is almost a hidden 5% fee being levered on the customer as well. At no time in the past 3-4 days has a Bitcoin been worth as little as $6.04. This isn't a weighted market average, it's just price gouging.

You're essentially charging fees exceeding 7% whilst claiming to be cheaper than PayPal and Credit Card. It's not good business practice, it's bordering on fraud, and I hope that either you get your act into gear or BFL find a more consumer-friendly payment gateway.

I was planning to use BitPay for my next BFL order, but now I think I'll just wire it.

[/rant]

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June 25, 2012, 09:26:21 PM
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Dear Bit-Pay,

We all know that in business, you have to make a profit, but as a payment processor, your profit should be primarily taken from fees on the merchant's side. You do charge these fees at 2.69%. Brilliant.

Bitcoin spot price right now is $6.31, but according to your site, you're treating each Bitcoin as just $6.04. This is almost a hidden 5% fee being levered on the customer as well. At no time in the past 3-4 days has a Bitcoin been worth as little as $6.04. This isn't a weighted market average, it's just price gouging.

You're essentially charging fees exceeding 7% whilst claiming to be cheaper than PayPal and Credit Card. It's not good business practice, it's bordering on fraud, and I hope that either you get your act into gear or BFL find a more consumer-friendly payment gateway.

I was planning to use BitPay for my next BFL order, but now I think I'll just wire it.

[/rant]
Yay, entrepreneurship!
And, as you have done, just skip them if you don't like it.
It's not fraud from the merchant's perspective, and the customer can use other methods at their discretion.

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June 25, 2012, 09:33:18 PM
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It's frustrating because I'd rather support Bit-Pay than a big bank / PayPal / Dwolla but I feel like they're margin gouging beyond what's reasonable in the market. Even MtGox & Virwox do not have 7% fees on BTC -> USD.

It's not going to do them or Bitcoin any favors to take a transaction with tiny overheads (~1% max) and make it cost more than PayPal and credit card transactions, which are already wildly expensive. Payment gateways make profit on volume, not on a few transactions.

Also: To clarify, the 'bordering on fraud' comment was wrt the way they show their fees against the competition (PayPal and Credit Card) without accounting for the fact that they're not using any reasonable indicator of Bitcoin price.

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June 25, 2012, 09:36:01 PM
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It's frustrating because I'd rather support Bit-Pay than a big bank / PayPal / Dwolla but I feel like they're margin gouging beyond what's reasonable in the market. Even MtGox & Virwox do not have 7% fees on BTC -> USD.
Did you notice how they had so many BTC from these pre-sales that they would have killed the liquidity on all exchanges except mtgox, and would have caused a dip to under $6 on the gox? Now they have to get rid of the coins without going broke. That's why they charge so much.

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June 25, 2012, 09:40:39 PM
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Its true they probably had to account for selling all those coins and pushing the price down. I think thats the reason for the price.

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June 25, 2012, 09:42:06 PM
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Pretty sure selling what they now currently hold in bitcoins will be enough for it to dip to the 6.0 range.
If not lower if they sell too quickly. That risk is the expense of working in a new and still small market.
When sometimes has huge influxes in growth.

Hold too much power and you can shape it... with consequence.
But if you are the one needing to sell at a good price on a regular basis, you screw yourself long term if you mess up the market.

Also don't compare paypal fees to them. They are cheap for a reason.
If you compare them to fees by a real one, their fees are fine.

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Luceo
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June 25, 2012, 09:42:34 PM
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Well presumably they aren't going to crash all that liquidity because they'll sell at a slower pace, given that they want to maximise their profits.

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June 25, 2012, 09:42:49 PM
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Where did you see the exchange rate? Do you have to be signed up for their service?

-bgc

I'm selling great Minion Games like The Manhattan Project, Kingdom of Solomon and Venture Forth at 4% off retail starting June 2012. PM me or go to my thread in the Marketplace if you're interested.

For Settlers/Dominion/Carcassone etc., I do email gift cards on Amazon for a 5% fee. PM if you're interested.
Luceo
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June 25, 2012, 09:44:22 PM
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Where did you see the exchange rate? Do you have to be signed up for their service?

-bgc

It's on their site at https://bit-pay.com/accountingHelp.html

Also don't compare paypal fees to them. They are cheap for a reason.
If you compare them to fees by a real one, their fees are fine.

I'm not comparing Paypal to them, they are: https://bit-pay.com/accountingHelp.html

I'm comparing MtGox and Virwox to them, and they still come out pretty unfavorably.

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June 25, 2012, 09:44:51 PM
 #10

The prices listed on this page

https://bit-pay.com/accountingHelp.html

are for items sold in the bit-pay shopping cart.  the calculation of that rate is detailed on that page.

For items sold through a cart plugin or API (which are the BFL orders), we pull the full market depth from 3 exchanges, merge them, and calculate a market clearing price for the amount of the order.

At no time has anyone buying through BFL been quoted a rate less than 6.25.

Just FYI - the reason we calculate the shopping cart the way we do is because exchanges were (and still do) report erroneous data.  We pull the high bids from 3 exchanges, and kick out the one data point that is farthest away from the average.  This could be a low outlier or a high outlier.  This filtering prevents erroneous data like a 0.01 bid or a 170,000 bid from being in the calculations.  Some exchanges are notorious for putting out a bad data feed, unfortunately.

BitPay : The World Leader in Bitcoin Business Solutions

https://bitpay.com

Does your website accept bitcoins?
Luceo
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June 25, 2012, 09:47:04 PM
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The prices listed on this page

https://bit-pay.com/accountingHelp.html

are for items sold in the bit-pay shopping cart.  the calculation of that rate is detailed on that page.

For items sold through a cart plugin or API (which are the BFL orders), we pull the full market depth from 3 exchanges, merge them, and calculate a market clearing price for the amount of the order.

At no time has anyone buying through BFL been quoted a rate less than 6.25.

Oh OK, wow. Now I feel very stupid.

Sorry for the misunderstanding. I will correct the OP. Feel like I can support Bit-Pay again. Cheesy

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June 25, 2012, 09:48:42 PM
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Oh OK, wow. Now I feel very stupid.

Sorry for the misunderstanding. I will correct the OP. Feel like I can support Bit-Pay again. Cheesy

No problem.  In fact the rate we quote for all BFL orders is the same exact rate a customer would get if they issued a market sell order on the exchanges, but we do not charge any commissions.  We actually have the fairest buy rates out there I believe.

So you are better off spending your bitcoins rather than selling them and spending the fiat.

BitPay : The World Leader in Bitcoin Business Solutions

https://bitpay.com

Does your website accept bitcoins?
Luceo
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June 25, 2012, 09:51:55 PM
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Oh OK, wow. Now I feel very stupid.

Sorry for the misunderstanding. I will correct the OP. Feel like I can support Bit-Pay again. Cheesy

No problem.  In fact the rate we quote for all BFL orders is the same exact rate a customer would get if they issued a market sell order on the exchanges, but we do not charge any commissions.  We actually have the fairest buy rates out there I believe.

So you are better off spending your bitcoins rather than selling them and spending the fiat.

Oh, trust me, I'm far happier staying in Bitcoin than dealing with fiat at any time I don't have to deal with fiat. Yeah, I apologise for the misunderstanding, and I'm a big supporter of the Bit-Pay model (feels like it's got the potential to get Bitcoin payments into physical locations using NFC etc). Was just a little worried that the price was so far out.

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June 25, 2012, 10:07:31 PM
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Oh, trust me, I'm far happier staying in Bitcoin than dealing with fiat at any time I don't have to deal with fiat. Yeah, I apologise for the misunderstanding, and I'm a big supporter of the Bit-Pay model (feels like it's got the potential to get Bitcoin payments into physical locations using NFC etc). Was just a little worried that the price was so far out.

One of the things we can do is put a calculator on our site, where you can input a fiat amount, and it will calculate from the merged exchange order book what the rate will be.

We have a whole lot of things on our plate, but I can see how this will be useful.

BitPay : The World Leader in Bitcoin Business Solutions

https://bitpay.com

Does your website accept bitcoins?
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August 09, 2012, 05:56:58 AM
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One of the things we can do is put a calculator on our site, where you can input a fiat amount, and it will calculate from the merged exchange order book what the rate will be.

This calculator would be awesome, I've just spent the last 20 minutes or so trying to figure out how much btc i need for a jalapeno...

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