Two-Sided Markets: Are Crypto Payments Cheaper Than Credit Card Fees?

Crypto payments can cost a merchant less than credit card fees, especially for premium and international cards, but the saving is small for domestic debit cards and comes without the buyer protections that card fees help pay for. Card costs are shaped by the economics of two-sided markets and by UK regulation, while crypto costs depend on gateways, blockchain fees and currency conversion.

What Does a Merchant Pay to Accept Card Payments?

The total a merchant pays to accept a card is the merchant service charge. It has three parts: the interchange fee paid to the cardholder’s bank (the issuer), scheme fees paid to the card network, such as Visa or Mastercard, and the acquirer margin kept by the merchant’s payment provider.

Most small businesses use flat-rate providers that blend these into one price. Stripe’s UK pricing, for example, lists 1.5% + 20p for standard UK cards, 2.8% + 20p for premium UK cards, 2.5% + 20p for cards issued in the European Economic Area (EEA) and 3.15% + 20p for international cards, plus 2% where currency conversion is needed.

Why Do Card Networks Charge Interchange Fees?

Card networks are a classic two-sided market: a market in which a platform serves two distinct groups of users, and the value to each group depends on how many users are on the other side. A card network needs cardholders to attract merchants, and merchants to attract cardholders. According to Jean-Charles Rochet and Jean Tirole, pricing structures are as important as the total price in a two-sided marketplace; furthermore, a single network can set higher pricing on one side to subsidise or attract participants on the opposite side of the marketplace.

Interchange does exactly that, moving revenue from merchants to card issuers, which use it to fund rewards and fraud protection that make cards attractive to consumers. Strong network effects mean merchants accept the cost, because refusing popular cards would lose sales. Competition between networks to win issuers can therefore push interchange up rather than down, which is why many regulators cap it.

How Does UK Regulation Limit Card Fees?

Under the Interchange Fee Regulation, which the UK kept after leaving the EU, interchange on most domestic consumer card payments is capped at 0.2% for debit cards and 0.3% for credit cards.

Cross-border payments are a different matter. According to the Payment Systems Regulator (PSR), Mastercard and Visa raised fees on online payments by EEA cardholders to UK businesses from 0.2% to 1.15% for debit cards and from 0.3% to 1.5% for credit cards between 2021 and 2022.

In October 2025, the PSR decided not to introduce a temporary cap on these fees and is instead developing a method for setting a longer-term one.

UK businesses have also been unable to add surcharges to most consumer card payments since 13 January 2018. Merchants cannot pass the cost of card processing on to their customers. Therefore, the price of products includes the total cost of card processing per item sold. In addition, all consumers, including those who use cash or debit cards, subsidise purchases made by credit card holders because merchants provide their customers with premium rewards and benefits.

How Much Do Crypto Payments Cost Merchants?

A crypto payment removes the issuer, card network and acquirer from the chain. The customer sends funds from a digital wallet to the merchant, while blockchain payment gateways create the invoice and confirm the payment. The remaining costs are a gateway fee, usually a percentage of each payment, and a network fee paid to the blockchain. The network fee is normally paid by the customer and varies with the blockchain and how busy it is. Merchants also pay to convert crypto into sterling, and holding volatile coins such as Bitcoin exposes revenue to price swings.

Stablecoins pegged to the US dollar avoid much of that volatility, but for a UK business they still carry risk from movements in exchange rates between the dollar and the pound. Crypto also has no interchange, scheme fees or chargebacks. That removes costs for the merchant but also removes buyer protection. Card payments offer chargebacks, and under Section 75 of the Consumer Credit Act, credit card issuers are jointly liable with the seller for single items costing more than £100 and up to £30,000.

Crypto vs Credit Card Fees: A Worked Example

A single sale shows how crypto vs credit card fees compare in practice. The table applies the Stripe rates above to a £60 online sale and compares them with a crypto gateway charging an illustrative 1%. It leaves out the blockchain network fee, which the customer usually pays.

Crypto vs Credit Card Fees: A Worked Example

Fees based on Stripe UK published rates applied to a £60 online sale. The crypto gateway rate is illustrative. Blockchain network fees, usually paid by the customer, are excluded.

For a domestic customer with a standard card, the saving is about 50p, and it shrinks further once the merchant pays to convert crypto into sterling. For premium and international cards, the gap is much wider.

When Do Crypto Payments Make Economic Sense?

Crypto payments suit businesses with many international customers, sellers of digital goods that face frequent chargebacks, and merchants whose customers already hold stablecoins. They make less sense where most customers pay by domestic debit card or where every payment must be converted into sterling immediately.

The key constraint for using Bitcoin is adoption: Both sides of the equation, i.e., the merchant and the consumer, are dependent on each other to drive adoption at this stage. The consumer will only hold Bitcoin if the merchants accepting it create a demand for that holding in the first place. Card networks solved this with incentives funded by interchange. Crypto has no equivalent mechanism, which is why it has grown fastest in niches where its cost advantage is greatest.