By Alice Seeley
Last week, PayPal and Venmo announced that they are increasing fees for crypto transactions under $200. The pricing adjustments are an effort to provide investors with more transparency, according to the companies.
“In an effort to streamline our existing pricing structure, we will be introducing a flat-fee structure for cryptocurrency transactions (buying and selling) under USD$200 on PayPal and Venmo, removing the complexity of percentage-based calculations for the consumer,” a PayPal spokesperson stated.
For any crypto transactions under $25, Venmo and PayPal currently charge 50 cents.
The companies charge 2.3% of the crypto transactions for trades between $25 and $100 and 2% for those between $100 and $200. Effective March 21, Venmo and PayPal are now charging 99 cents for crypto transactions between $5 and $25 and $1.99 for crypto transactions between $25 and $75.
For any crypto transactions between $75 and $200, users will be charged $2.49. Because of the new fees, crypto transactions between $130 and $200 are cheaper, but crypto transactions below $130 are more expensive.
According to data, the average cryptocurrency transaction on Venmo and PayPal is around $250. Although some customers make cryptocurrency transactions well below that, the new fees will negatively affect the average user.
The only reason a customer would make a small cryptocurrency transaction on Venmo or PayPal would be for convenience. These platforms allow customers to use cryptocurrency easily without creating a new account on a cryptocurrency platform. However, the convenience may not be worth the increased fee.
Other platforms such as Binance have lower transaction fees of 0.1%. If a consumer uses an online brokerage firm such as Robinhood, there are no fees. In addition to the higher fees, PayPal and Venmo currently only allow four types of cryptocurrency to be used on their platform.
