P2P (peer-to-peer) technology allows transferring crypto at the cost of a small fee, close to the market rate.

However, once you need to buy, sell, or exchange coins, you would want to get an intermediary involved. An exchange will ensure you get what you paid for in just a matter of seconds.

Getting crypto for your fiat funds used to be a privilege of a few platforms, but now with the help of dedicated gateways like Mercuryo, almost any cryptopowered business allows its users to purchase digital assets.

Naturally, it comes with a fee. In this explainer, we’ll break down the fee structure of the apps that sell digital assets and give an idea of why the commissions within the same platform might vary.

Network Fees

Every crypto transaction requires a network fee — a small payment for verifying and recording data on the chain. Some technology companies, like Ripple, offer cheaper transaction costs and others, like Nano, boast no fees whatsoever.

If the network operates smart contracts, it has a slightly different fee system. Ethereum network will charge you depending on the type of transaction and the amount of computation it requires. The platform recently transitioned from the Proof of Work (PoW) to the Proof of Stake (PoS) algorithm, this didn’t reduce fees, however.

The highest Ethereum gas fee ever paid was $196.638. Next time you see the gas fee going to the moon, do not rush into giving it all away. Monitor Etherscan while you’re waiting for the fee to go down, or try using Layer-2 scaling solutions.

Exchange Fees

It’s worth mentioning that we’re not going to talk about trading (maker and taker) fees as they are an entirely different topic. Now, if you’re using any platform, be it a wallet, a DEX, or a centralised exchange, to buy crypto with a credit card, you will pay the commission to the exchange provider. If the platform claims it doesn’t charge any fees, you’ll likely be paying the hidden fee — included in the exchange rate.

Some platforms charge you a percentage of the total amount, while others go with a flat fee that increases proportionally to the size of your purchase. Centralised exchanges usually take a commission for withdrawals (off-ramp fee) and are often considered more expensive than DEXs.

However, decentralised exchanges can also charge a handsome commission, especially if fiat or more complex swaps are involved.

Payment Layer

On top of the order size, a crypto on-ramp will generally include the cost of card processing, network fee, and take into account market conditions such as volatility and liquidity into the final commission.

On-ramps — such as Mercuryo — often feature dynamic fees that change according to the region, local currency rate, or the selected payment method.

Although it’s difficult to calculate the share of this factor in each transaction, providers like Mercuryo also need to ensure they are being compliant and perform the required KYC checks that can also come at additional costs.

The Bottom Line

There are usually quite a few parties involved in the crypto purchasing process: credit card processors, payment service providers and facilitators, and the networks themselves. Your final purchasing fee will usually take into account the currency exchange rate, your geo-location, and order size.