Is Bitpay More Expensive For Customers Compared To CoinBase?

When it comes to accepting Bitcoin as a payment method for goods and services, there are multiple payment processing options to choose from. CoinPayments is pretty straight forward and lets you accept alternate digital currencies as well. BitPay is the world’s leading Bitcoin  payment processor to date because of their excellent services. And Coinbase lets you buy and sell Bitcoin as well as use it to accept digital currency payments. But what sets these last two apart other than the services offered?

BitPay vs CoinBase

Both Bitpay and coinBase allow merchants to accept Bitcoin payments in a simple and elegant way, whether it is online [by editing a few lines of code] or in-store [with software or a point-of-sale terminal]. And both companies seem to operate in roughly the same areas, most notably North America and Europe.

One of the things BitPay has going for them is their brand awareness. Even though most people in the Bitcoin space have heard of CoinBase, people who are not involved with digital currency will most likely only encounter the BitPay name. Due to BitPay’s strong brand building – such as sponsoring the St. Petersburg Bowl for three years and running a few commercials on national television – they seem to have a leg up over their competitors.

But what if there was another major difference between both platforms, something we should be all aware of but no one seems to pay attention to it? As both companies process Bitcoin payments, they need to use a certain source to check the current Bitcoin price in fiat currency, and give the customer a quote on how much Bitcoin he or she has to pay to cover the amount owed to the merchant.

It is safe to assume that both companies use a different source to determine the current exchange rate. Given Bitcoin’s price volatility, it is important to have an accurate conversion rate between fiat and BTC, otherwise BitPay and CoinBase stand to lose a lot of money. After all, both companies owe the merchant the exact amount of the transaction,regardless of the current Bitcoin price.

Exchange Rate Differences

Picture the following situation : you are buying a certain gift card on Gyft.com, an online store accepting Bitcoin payments. The unique feature about Gyft is the fact they allow customers to pay in Bitcoin through either BitPay or CoinBase. it is not often that we see one retailer using both platforms to process a Bitcoin transaction, but it will serve us perfectly in this case.

When I tried to purchase a US$50 Amazon.com gift card on Gyft, I noticed something very strange. There is a Bitcoin price discrepancy between both CoinBase and BitPay, which can become quite large depending on your order amount. On the amount of US$50, the difference between both servicers is 0.0008 Bitcoin, or about US$0.19 at the Bitcoin price of US$236.92

That amount may seem rather insignificant to you right now, but it does beg the question where this difference is coming from. BitPay operates on a 0% fee structure, so the US$0.19 can’t be counted towards covering any fees. There is only one possible explanation for this : BitPay’s Bitcoin price estimate is either delayed compared to the current price, or they are using an exchange where the price is higher than the average right now.

But all of that leads to another question : are customers paying too much when the merchant of their choice accepts payments through BitPay? For microtransactions below US$100, hardly anyone will care about how much they are actually paying. But it is definitely a matter we at BTCFeed will investigate further over the next few weeks.