There is a steady increasing number of bitcoin ATMs on the map. However, many people complain that fees to use these machines are still high, although these complaints might not be that prominent as they were at the start of first bitcoin ATMs launch times. Users finally realize that running a bitcoin ATM is not that easy and there are many costs associated with it.
Bitcoin ATM fees were already analysed in our blog back in 2014. This article is supposed to look at what are the latest figures across the industry as of the end 2016.
There are two ways of collecting fee size on the site:
- First is based on the manually defined values. This is normally used for bitcoin ATMs, which don’t support passing online information over API. Most prominent example is Lamassu with currently 185 installed and operational bitcoin ATMs across the world.
- Another way to collect data is via online feeds. There are several bitcoin ATM providers, which support online reporting of information similar to the one used at actual machines. These are: Genesis Coin, General Bytes, and Bitaccess. In case of Genesis Coin and General Bytes machines, online price is taken and converted to fee size based on Bitcoin Average rate. This allows to make all fee size comparable. In case of Bitaccess fees are reported directly.
Since April 2015 we collect daily information about fee size. There were some algorithm adjustments to calculation and storing procedure over time, but generally fees are comparable historically.
Current worldwide average bitcoin ATM fee is 8.4% for buying bitcoins from machines, and 5.4% for selling bitcoins for cash.
The following chart shows how these rates changed over time:
As it is clearly seen average sell rate was relatively constant over time, floating around 5.5%, while average buy bitcoin fee at ATM went up from about 6% to roughly 8%. Also from the chart it is seen that rise in buy fees is mostly attributed to 2015 year, while in year 2016 rate was relatively stable at around 8%. This could be explained that major operators entered the market in 2015 and basically did price discovery at the same time, while in 2016 they were increasing number of machines in their networks, probably keeping the price at the same level.
Top three countries with largest number of ATMs are USA, Canada, UK. Let’s check how fees evolve in these countries over time.
USA is the largest market with 520 (58% of all worldwide) bitcoin ATMs installed in the country.
Being the dominant market, USA influences the worldwide rates a lot. This can be seen from similarity of dynamics on both charts. There is an interesting drop in sell fees at the beginning of 2016, which potentially can be attributed to the following fact. Nowadays it is hard to find a banking partner to run such a business, as a lot of cash has to be deposited to the bank account and wired to bitcoin exchange or other BTC liquidity provider. Some operators started to charge even negative fee rates for sell BTC deals. What does it mean — any person could sell bitcoins for cash to a machine at a rate better than spot on the market (taking advantage of arbitrage get profits immediately), so such ATM operators transferred the liquidity provider functionality to end users, and earn mostly on buy bitcoin orders. That’s why average rate went to as low as 4% and stayed at about this level for the whole 2016 year.
Canada is the second largest market with 135 (15%) bitcoin ATMs installed in the country.
In Canada there was no significant change over time. Buy bitcoin fee stayed relatively stable at 6%, sell bitcoin fee grew over 1.5 years from ~5.5% to ~6.5% on average. Interesting to see on contrast from American market how buy and sell fees are relatively the same.
United Kingdom is the third largest market with 46 (5%) bitcoin ATMs installed in the country.
Fees for buying bitcoin grew over time in UK: from ~4% to ~6%. Sell fee rate was floating around 5-6% interval, with some spike up to 9% in the end of 2016 and then retracting back to ~6%. There is no clear reason which could lead to this spike.
By manufacturer / ATM type
We look at top 4 manufacturers, which cover 83% of the market of installed machines: Genesis Coin, Lamassu, General Bytes, BitAccess. The following chart shows comparison of average fees for buying bitcoins at different machine types.
Lamassu and General Bytes operators charge on average similar fee ~6.5%, and General Bytes operators fee distribution is more dense around the mean value. Then there are Bitaccess machines with ~7.5% on average. The most expensive to use are Genesis Coin machines with an average of 11% buy bitcoin fee.
It was interesting to check how the price differs at one-way machines vs. two-way machines of the same manufacturer. In particular BATM2 vs. BATM3 for General Bytes, and Satoshi1 vs. Satoshi2 for Genesis Coin.
Although the values are not statistically significantly different, there is a tendency that on average buying bitcoins is cheaper at ATMs which also support sell bitcoin operation (2-way). As an explanation probably could be used the argument that operator earns on these machines more due to larger scope of operations, hence can allow lower fee for buying bitcoins. On average the difference is about 1%.
Online updated vs. manual input
As there are two ways in which fees are defined on the site (see above) it was interesting to check whether manually defined fees are biased (could be on purpose defined lower than actual (online updated) fees).
The following two charts demonstrate distribution of bitcoin ATMs depending on fee size in the U.S.
Generally, there is no obvious pattern of misreporting fees when they are set manually on the site. The spike for online updated fees at 7% is contributed by Coinsource bitcoin machines, who currently has 67 machines and charges 7-8% at their machines.
It was a common belief that with larger number of bitcoin ATMs installed and increased competition fees will go down at machines. The pattern of previous 1.5 years shows on opposite that fees are increasing. This can be explained by demand inelasticity, which means there is relatively stable demand despite the price level, while it keeps at reasonable levels (e.g. comparable to localbitcoins deals), also there are costs associated with running a bitcoin ATM and operators need to put markup or markdown from spot price in order to be profitable.
Another conclusion is that the world of bitcoin ATMs is split into 2 approximately equal parts: one is the U.S. market with an average fee of roughly 10% for buying bitcoins, and the rest of the world with an average of 6% fees. Combined together they give 8% fee on average, but it’s a tyranny of averages in this case.
Manually defined fees on the site don’t have obvious bias (not reported intentionally lower), and can be used as a good indicator about fee size, when automatically reported fees are not available.