BitPay's visa card offering is nearing the unusable status with it's latest move that strips users of their ability to send bitcoin inexpensively to fund the card.
You can no longer used pooled services like exchanges to save on fees when sending to BitPay and in fact, you cannot even send bitcoin to a bitcoin address when sending value to BitPay. You have to use a wallet that supports the QR Code protocol. The result?
To send just $10 USD to the BitPay card is going to cost $65.37 where $21.38 of that are BitPay fees and where Bitpay is forcing people to pay $31.99 in miner fees.
This is BitPay, not the miners, and not the blockchain. This is BitPay.
To make things worse, this was attempted using their own wallet to fund their product. Which if isn't used, gives you even less visibility of what fees are being charged on top of the already unclear fees.
BitPay's Visa Card OfferingThe card offering hit the scene about a year ago and boasts one of the higher withdraw limits of cash among the many industry offerings. It's already limited in use being only able to load the debit card with bitcoin by paying an invoice created by BitPay which then funds the card through the GreenDot network.
This is unlike other offerings such as Coinbase or XAPPO which draws on a specific bitcoin wallet account or Upheld's Master Card which allows the immediate funding online as an internal transaction. It's further degraded in that it only is available to the United States.
In all fairness there are just as many offerings out there that operate exactly the same way in that they have to be funded and the problem with all of them is that once it's funded, there's no going back to bitcoin. You are stuck with the fiat.
Degraded UsabilityPreviously, using the Bitpay card was tolerable even with the network fee of about $4. That was until until the price of bitcoin hit the moon. Now fees are as much as $15-$20 to get anything anywhere within any kind of reasonable time frame.
This is further hindered by the BitPay invoice itself which limits the time to fund the invoice to 15 minutes. If you do not have at least 1 confirmation within 15 minutes of the invoices creation, the funds are then treated in various ways which sometimes result in the bitcoin price being honored and in others being credited once the payment received up to 6 confirmations at the price calculated 1 or even 4 hours later.
Of course, there is no going back once sent and once sent to BitPay it's as good as gone.There's no returning the value to bitcoin form.
Further Degraded Usability and Hidden FeesTo remedy this situation and save on fees a BitPay card user could use an exchange or other pooled service to to save on fees. Many pooled services calculate the fees as a group of transactions and send large groups which saves network fees on individual transactions.
Poloniex for example, charged only 0.0001 BTC to send bitcoin up until a few days ago when they raised the withdraw fee to 0.0002. Which is still far cheaper than sending it from your own wallet if you expect it to get anywhere anytime this century.
NO MORE. BitPay no longer allows you to send bitcoin to a bitcoin address.
This means you are forced to pay ridiculously high network fees of up to $35 or more to fund the BitPay card.
Of course, this is on top a Bitpay fee, GreenDot fee, and who knows what other fees in addition to any additional miner fees included resulting in the possibility of paying $60 to send just $10.
The fees are no longer easily explained and it's unclear how things got to this point since sending funds to BitPay used to cost about $4 or $5. We gave this a try to see what the fees were and if we could duplicate a transaction resulting in ridiculous amounts of fees.
Fortunately, we were still able to send from Poloniex at the cost of 0.0002 since BitPay implemented the new requirement a couple days ago but then rolled it back before implementing it again today.
We requested to fund a BitPay Visa card in the amount of $33 USD. BitPay created an invoice asking for a payment of 0.002742 at the rate of $17,115.43 cents.
[warning title="Note"]This test was done BEFORE BitPay enforced the QR Code protocol. We were able to use an exchange to fund the card and reduce the mining fees to about $4. This is no longer possible.
BitPay doesn't break any fees down or list items you are paying for on the invoice so unless you are really paying attention, you may not realize that 0.002742 is not $33.
The actual amount comes to $46.93 and this is BEFORE you pay any blockchain network miner fees. This is BEFORE. Meaning BitPay is charging you nearly $14 dollars ($13.93) to fund this card $33.
What the hell is going on here?
Once that funds you don't see that amount anymore either. When the email comes in letting you know it funded and this screen is closed. THIS is what you get:
The email (above) gives us the correct amount of what equates to exactly $33, however WE SENT 0.002742 which was actually $47 dollars. Why is this email trying to act like this didn't just happen? This is rather misleading.
$14 dollars? For WHAT? Where does this number come from?
This had NOTHING to do with blockchain network fees. WE PAID the blockchain network fees via Poloniex at the rate of 0.0002 for this transaction which resulted in an additional $3.43 for a total of
... wait for it ....
$50.36 to send $33 to the BitPay Visa Card. That is ridiculous and makes this card as close to completely worthless as you can get short of cutting it in half. Unless you just like throwing money in the garbage can which is what happened here to over $20.
Additionally the funding email subsequently supplied showing the amount in bitcoin is horrendously misleading making no mention of the other $20+ that they were sent. You can however, click the invoice which brings up a general and fully aggregated amount of the original invoice.
Which means you still don't know what the hell you just paid for.
IT GETS WORSETo add insult to injury, as if all of the above didn't suck enough ... you can't even do this anymore.
We were able to send for a fee of 0.0002. Not the case anymore and you're likely going to end up paying double if not triple this amount in fees. That final hope of using the card ended with BitPay's latest move of requiring the QR Code protocol which no longer allows a user to send directly to a bitcoin address.
The best possible chance for use here would seem to be using BitPay's own wallet which of course charges you more in fees and required higher network fees, but are they cheaper than other wallets right? Maybe Electrum would do the trick? Anything?
No, no, and no.
We tried to send $35 of the $70 dollars we put in an Electrum wallet for this test. Even Electrum said we didn't have enough. Again the QR Protocol and BitPay using that to enforce a miner fee above and beyond what even the highest recommended fee is.
We tried two different BitPay wallets on two separate devices. One of which is the screenshot from above and then this one:
This is directly from BitPay's own software. The hard requirement again for a $34.05 cent miner fee and again, an unexplained $21.42 in additional fees.
There is going to be a fee expected. We know that going in but $21.42?? GreenDot, the network BitPay uses to fund the card, only charges around $3 to $4 to do this so we can only assume that BitPay's fee is around $18.00 of this gouge.
We tried every wallet recommended by BitPay and even tried using their online website to generate the invoice in an effort to see if anything would work. It resulted in about the same.
Using the website and then capturing the code with BitPay's own wallet on a cell phone seemed to get the best result, however it was just as equally as ridiculous.
No Viable Reason for UseFortunately there are plenty of other options over BitPay's offering because there is no circumstance we can come up with to ever use this card at this point. We generated an invoice in the amount of $3000 which requested the same approximate amounts of about $23 in fees and $35 in miner fees for a total of nearly $60 to send $3000 to the card.
For the BitPay card to make any sense, assuming the same fee schedule is in place for $5,000, then that would be 1% of that and something that may make some sense in a pinch, however for purchases of that size you're better off using bitcoin directly because you cannot forget the fact that you cannot get the bitcoin back so it's only good for real-time purchases and better used for small purchases.
The Bitpay card had once been a great card for daily purchases but they have eliminated it's use there. Since it doesn't make any sense to make large purchases and you're limited there on how much you can actually send and you certainly don't want to store any value on the BitPay card over holding bitcoin, what reason on earth is there to use the BitPay visa card?
There may not be one.
[accordion] [item title="Author and Credits"] Article by dinbits
Image Credits: Banner Image by dinbits.com staff