What are Convenience Fees and Why Do You Charge This?
Coincards was established in 2014, and when we started this service we had an issue that was very clear: Gift Cards are considered money, and money isn’t typically discounted. Especially when you are a single bitcoiner trying to start a service to help other bitcoiners.
Starting a service is hard, but starting a service with absolutely no revenue stream is almost impossible and definitely not sustainable. We needed a revenue stream, and we couldn’t count on the vendors to give us discounts without significant volume… which we couldn’t achieve without discounts.
In order to solve this problem back in 2014, we created what we call the “Convenience Fee”. This was a 5% flat fee on all orders. This fee was to guarantee that Coincards.com brings in a minimum of 5%.
For anyone who has worked in any sort of retail, or even running any type of business, you will know that 5% is a very very small profit margin. This 5% must cover our Staff, Office Expenses, Legal Bills, Advertising, Servers, Developers, etc… However, Coincards was committed to providing this service, and we knew that our service would become invaluable to our customers, and eventually to the brands we wanted to represent so we were devoted to making this fee low for our users.
Fast Forward to Now
Coincards.com now has a relationship with most of the brands we sell gift cards for. These relationships mean that some brands are starting to see the value that our service brings to them and their customers. With these relationships in place, we are now seeing more discounts on the products we sell.
As Coincards gets discounts from our brands, we are actively adjusting our own fees to reflect this discount, so that Coincards still only makes a total of 5%, while the customer pays less of a fee.
Examples of Fees:
Below are some examples of how we calculate our fees and how discounts are recalculated to decrease fees:
- The merchant gives no discount on a $100 Gift Card:
Gift Card: $100 + Convenience Fee: $5 (5% of 100) = Total: $105
- The merchant gives a 3% discount on a $100 Gift Card:
Gift Card: $100 + Convenience Fee: $2 (2% of 100) = Total: $102
- The merchant gives a 5% discount on a $100 Gift Card:
Gift Card: $100 + Convenience Fee: $0 = Total: $100
There were no Convenience Fees on Coincards USA
Coincards launched our USA branded site in 2019 as an experiment, only offering those brands who offered a discount of 1% or more, and for the first 2 years post-launch, we decided not to add the convenience fees to these orders in an attempt to gain a “critical mass” of orders.
Unfortunately, our USA volume even after 2 years, is still only a fraction of the business we do in Canada. We also have noticed more and more brands have been removing or reducing their discounts. These changes have resulted in a crossroads for us with two options:
- Remove the brands, and reduce our selection
- Add our convenience fees and with it, the ability to add many more brands.
We have decided to bring on the Convenience Fee into the US market, and open up our selection to include those brands who do not offer a discount, or offer such a small discount, that we would not have been able to facilitate them in the past.
Your Competitor's Don't List Fees!
There is a common misconception that Coincards.com is “Expensive” because we have added in a “Convenience Fee”, however, it only seems this way as Coincards.com is the only Bitcoin to Gift Card business to list our fees in such an open and public manner.
The truth is, based on our internal research, all of our competitors also charge fees for their services. These fees are most often hidden in the exchange rate for a specific product, leading the customer to believe they are paying the market rate for a gift card while they are actually selling their bitcoin at a 20% discount.
Coincards.com is different because our rates are posted on the site at all times, and do not fluctuate based on the product.
- Coincards Posted Rate: $60000 / BTC + 5% Convenience Fee = $63000 / BTC
- Competitor Product Rate: $67500 / BTC + No Fee = $67500 / BTC
Coincards is built on open-source products, and we believe in being open in our processes and fee structures. We think it’s deceitful to hide our fees within our exchange rates. We also believe in giving the best possible rates, which is why we are committed to ever-increasing discounts, and basing our exchange rates on market value exchange rates.
If any of the above doesn’t make sense, or if you have any questions or concerns, please feel free to contact us directly at [email protected]
– The Coincards.com Team