Tony Gallippi, co-founder and executive chairman at BitPay, a leading bitcoin payments processing platform for merchants, revealed that ATMs in Las Vegas are charging over $124 in transaction fees for withdrawals through debit cards. Though there was no background information about the withdrawal or the amount requested, this is extremely high for a domestic debit card owned by a US card holder.
— Tony Gallippi (@TonyGallippi) October 22, 2017
According to a study released by NerdWacllet, most commercial banks and their ATMs in the US charge a fixed fee of approximately $5 and a percentage-based charge on the amount of money withdrawn by a foreign debit card user. For example, if a foreign debit card holder tries to withdraw $5,000 from a US-based ATM, the holder would likely have to spend $5 and additional $150, (3 percent of the amount).
Issue With Fiat Currencies and Physical Forms of Money
When making a withdrawal via an ATM, several intermediaries are required to process payments including the card issuer, the ATM operator and banks.
However, when using Bitcoin, the high withdrawal fees are alleviated as there are fewer associated costs and even when using a Bitcoin ATM, the user is not issued a physical form of the cryptocurrency.
This is one of the many reasons that experts are attracted to Bitcoin. In a recent interview with Bloomberg at the World Knowledge Forum, Tim Draper cited the ease of transporting Bitcoin as being one of the reasons he believes it will render physical forms of money useless in the next five years:
“I think [Bitcoin is] neither [a fraud or a bubble]. If you ask me five years from now, what I think this is [Bitcoin and cryptocurrencies] all going to look like, I think people are going to laugh when you try to use fiat currency at Starbucks. I think cryptocurrencies are much more transportable, it is much easier to use, it is a better store of value, and all of these companies that are transforming society, this is the most exciting thing that has happened in my world, even more exciting than the Internet was.”
Usage of Fiat Money in Major Regions is Decreasing
In China, spending using physical money is already decreasing, with many opting to spend money using fintech providers such as Alipay, rather than using cash.
In January of this year, Mofei Chen, founder and CEO of Money Bazaar said in an interview that he was shocked by the cashless society of China. Chen emphasized that many are using fintech platforms and use their phones to transact.
“I can hardly remember the last time I used my wallet. Few foreigners realize how fast and advanced the development actually is in new payment features and mobile financial services in China,” said Chen.
Shenzhen Starbucks Cafe Manager Lily Li also stated that most of the transactions by the Shenzhen Starbucks branch are settled through Alipay and NFC payment networks because most consumers refrain from using fiat money and services around it such as credit cards due to their high fees.