Reducing Payment Costs: Coinme’s Value Proposition for Merchants

Transaction fees steadily drain merchant profits, with credit card processors typically charging 2-3% on every purchase. For a business processing $1 million annually, these charges divert $20,000-$30,000 away from growth, inventory, or staff wages.

Cryptocurrency exchange Coinme has identified this pain point as an opportunity where crypto payment infrastructure could deliver substantial savings. The Seattle-based company now offers businesses an alternative payment rail with potentially lower processing costs.

The Fee Burden

Traditional payment networks maintain complex fee structures that merchants cannot easily avoid, including interchange fees, assessment fees, and processor markups.

“Because the merchants don’t have to pay so much to Visa or Mastercard, they theoretically should offer a discount,” suggests Coinme CEO Neil Bergquist. “We’ve all seen the signs that say pay in cash and get a discount. I think we will see something very similar around digital currency and get a discount.”

This observation points to a fundamental value proposition: if businesses can process payments at lower costs, they may share these savings with customers through discounted prices.

Cost Reduction Mechanisms

Cryptocurrency transactions eliminate several layers of traditional payment infrastructure, potentially reducing costs through multiple mechanisms:

Elimination of chargeback risk: With cryptocurrencies, transactions are typically final once confirmed on the blockchain.

Direct settlement without intermediaries: Crypto payments can move directly from customer to merchant without requiring multiple financial institutions each taking their cut.

Lower fraud management expenses: Blockchain-based payments reduce this burden through cryptographic security.

Bergquist emphasized this advantage: “It’s easy to steal, it’s easy to spoof. Whereas with crypto, if you hold the key, you have the signature, then you’re the one putting that transaction on the blockchain, that’s irreversible and it removes the chargeback risk.”

Potential Merchant Savings

For a small retailer currently paying 2.9% plus $0.30 per transaction (typical rates for many payment processors), switching to crypto payments could potentially reduce fees to under 1%. On $500,000 in annual sales, this difference represents approximately $9,500 in additional profit.

Coinme’s approach focuses on making these savings accessible through API integration. Rather than requiring merchants to handle cryptocurrency directly, Coinme’s infrastructure manages the technical aspects, including accepting crypto payments and converting them to fiat currency if the merchant prefers.

Customer Incentives

Merchant savings create room for customer incentives, addressing one of the primary barriers to crypto payment adoption: customer motivation.

“Offering discounts on merchandise if someone pays in crypto, because obviously the merchants not having to pay so much to these are MasterCard, they theoretically could or should offer a discount. That’s certainly an incentive opportunity area,” explains Bergquist.

This approach mirrors existing cash discount programs that many merchants already implement to avoid credit card fees.

Implementation Challenges

Despite the compelling cost advantages, significant hurdles remain:

Price volatility concerns: Merchants worry about accepting payment in assets that might lose value before conversion to fiat currency.

Technical integration complexity: Many businesses lack the technical expertise to handle cryptocurrency transactions.

Regulatory uncertainty: As Bergquist notes, “When you deal with companies worth more than a billion dollars and already have a good thing going, they’re less likely to take a potentially unnecessary risk.”

Beyond Direct Fee Savings

Reduced transaction costs represent just one dimension of Coinme’s value proposition. The company’s B2B infrastructure also enables additional revenue opportunities, including tokenized loyalty programs.

“Think of it kind of like a rewards program where a company can tokenize some type of a reward and be able to use that as a reward when people make purchases or do a particular behavior.”

Through its evolution from a Bitcoin ATM operator to a comprehensive crypto infrastructure provider, Coinme has positioned itself to deliver meaningful cost reductions for merchants processing payments—potentially making these savings increasingly accessible as cryptocurrency adoption continues and regulatory clarity improves.