When you pay a BitPay invoice, your payment goes to a BitPay address. We pay network-based miner fees (like you pay to send your transaction) to combine the different cryptocurrency amounts paid to BitPay (a "UTXO sweep"). Then we send the funds to exchanges, where we get the fiat currency to pay BitPay merchants.
We need timely blockchain confirmations for these UTXO sweep transactions so we can exchange funds quickly and pay our merchants promptly. That's why paying an appropriate miner fee is important for us. If the estimated amount of this miner fee is more than 0.01 USD, we charge it to purchasers as a separate fee (the Network Cost fee). The Network Cost fee helps BitPay cover its miner fee costs.
Miner fee costs change for BitPay based on the network conditions of the currency you pay with, so the Network Cost fee also changes. Read our original post about why we introduced the Network Cost in February 2017.
BitPay charges a network cost fee for Bitcoin payments only. There is no network cost fee for Bitcoin Cash, Ethereum/ERC-20 tokens or XRP.
Frequently Asked Questions
Q. Didn't I already pay my miner fee?
There is a difference between the Network Cost fee and your miner fee you include with your payment. The cryptocurrency miner fee is usually included with your payment automatically, and it goes directly to the miners.
The Network Cost fee goes to BitPay to cover BitPay’s miner fee cost for the UTXO sweep of your payment. It is not the same as your miner fee for the miners, but it is based on recommended miner fee levels.
Q. What other purchaser fees does BitPay have?
The Network Cost fee is the only fee BitPay charges to people who pay BitPay invoices.
BitPay charges a small processing fee of 1-2% + 25¢ per transaction to BitPay merchants. Merchants may choose to pass this fee on to the buyer.
Q. What is BitPay paying miner fees for? What is a UTXO sweep?
When you make a blockchain transaction, you are sending funds to a wallet address controlled by another person (or in this case, BitPay). An Unspent Transaction Output (UTXO) is the unit of cryptocurrency which can actually be used in another transaction.
The miner fees BitPay pays to combine and sweep UTXOs from invoice receiving addresses are a major part of BitPay's costs of processing payments on the blockchains BitPay supports. This cost is not unique to using BitPay. Any business or person accepting on-chain payments has the expense of sweeping UTXOs from payments they receive.
This chart illustrates how your payment moves through BitPay and then to the merchant you are paying.
Q. How does BitPay calculate the Network Cost fee?
Miner fees are variable depending on network conditions and on how fast you want your transaction to be confirmed. The Network Cost uses one of the recommended miner fee levels of each of the blockchains we support:
- Bitcoin (BTC): We use the local currency value of the BTC fee suggested by the Bitcoin Core "Conservative" 2-block fee estimate. This is the fee level which Bitcoin Core recommends for helping Bitcoin transactions confirm within 2 blocks.
- Bitcoin Cash (BCH): We use the local currency value of the BCH fee suggested by the Bitcoin ABC 2-block fee estimate. This is the fee level which Bitcoin ABC recommends for helping Bitcoin Cash transactions confirm within 2 blocks. (The "Conservative" fee estimate mode does not exist in Bitcoin ABC.)
2-block speed allows us to ensure that we can process funds reliably and quickly in all network conditions. Using a lower-than-average miner fee can put a transaction at risk of slow confirmation or no confirmation at all.
The Network Cost fee amount fluctuates. It is tied to network conditions of the Bitcoin or Bitcoin Cash networks at that time. For example, if these networks are congested and miner fees rise, the Network Cost also increases.
Q. Where can I see the Network Cost on BitPay invoices?
We show the Network Cost amount in two places on BitPay invoices. You can find this information on the currency selection screen and the invoice total on the payment screen.
Our invoices show the Network Cost in your payment currency as well as your invoice currency.
Q. Why would a Network Cost amount show as $0.00?
If an estimated Network Cost amount is lower than $0.01 and less than 0.05% of the invoice price, BitPay does not show or charge a Network Cost fee.
Q. What if the Network Cost is too high?
If the Network Cost is $1, a $5 payment may be uneconomical for most people. In cases like these, you can let the BitPay invoice expire without payment. You can also use another supported cryptocurrency with lower fees.
You can always choose to pay your invoice with a lower cost currency like BCH, LTC, and DOGE. We also support Bitcoin Lightning Payments for low cost BTC transactions, as well as the ability to connect your Coinbase account directly, and pay from Coinbase with no fees.
Otherwise, if you want to use your original currency choice, you can combine your purchases and make a larger payment. A $1 Network Cost for a $100 payment might be worth it for you if you want to use a particular currency.