Bitcoin vs Credit Cards: How Much Fees Do You Actually Pay?

Bitcoin vs Credit Card Transactions: How Much Do You Save With Crypto?

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Using cash for transactions and payments has started to become unusual, especially with the rise of credit cards, online banking and digital currencies. 

Most payment processors now prefer and encourage cashless operations with multiple incentives to pay by card. Bitcoin emerged over ten years ago, adding a new dimension to electronic payment systems and creating a whole decentralised network of currencies that are not controlled by authorities. 

Does it mean that the BTC payment method is better? Do you really save money by using digital currencies? Let’s compare Bitcoin vs credit cards and find out the best way to transact money.

Key Takeaways

  1. Bitcoin and credit cards are two ways to transact and purchase products and services.
  2. Crypto transactions are more affordable and faster because they involve fewer intermediaries.
  3. Credit card payments incur more fees resulting from different parties involved in transactions.
  4. Businesses and households pay extra billions of dollars using credit cards in daily transactions and purchases.

Understanding Bitcoin Payments

Cryptocurrencies were established in 2009 to challenge the government-controlled means of payments, introducing digital currencies, wallets and audit books. 

This technology has quickly prevailed in the finance world and has become one of the most crowded and busiest markets, where traders, brokers and investors make money and grow their wealth.

crypto transactions benefits

These virtual currencies are stored online, without a tangible medium, and can be used for online payments, transactions, and money transfers because of the value of each cryptocurrency.

There are around 10,000 crypto coins and tokens, each of which has a variable value in fiat money and distinct tokenomics, defining the currency circulation and structure.

How Crypto Transactions Work?

Blockchain technology is the backbone of the decentralised system, where all crypto transactions, operations and activities are recorded immediately and transparently.

how crypto payments work

Having a digital wallet is necessary to send and receive virtual money. Once a crypto payment is initiated, the blockchain deploys smart contracts that communicate with the wallet to ensure sufficient funds.

Then, the transaction is validated against the ecosystem rules and regulations before being released to the recipient. This entire process happens within a few seconds or minutes and is not subject to centralised control or authorisation. 

Bitcoin and Ethereum are among the most popular crypto payment methods due to their valuation over the years and sophisticated blockchain architecture.

Understanding Credit Cards

Bank cards, on the other hand, use electronic payment systems that attach the money you deposited in your bank account to a debit card, which is deducted from your account every time you make a purchase.

Credit cards allow you to pay using funds from the bank or the financial institution, which you can pay off periodically or after settling into a payment schedule. Provider companies issue credit and debit cards, and banks manage your funds, which makes many of your assets controlled by authorities.

Traditional payment methods involve multiple intermediaries, which makes them associated with several fees, which can be higher than cryptocurrencies. 

Modern-type credit cards were first used in the 1950s, and the idea came when a businessman went out to dinner in New York but forgot his wallet at home.

Fast Fact

How Do Card Transactions Work?

Bank card payments entail several independent systems and servers that correspond to every order and work together to finalise a transaction.

Every time you make a typical Visa transaction, you allow the merchant to pull money from your account, which goes through a chain of mediators. A typical transaction usually includes five to six participants, such as the cardholder, the merchant, the merchant acquiring bank, the credit card network and the issuing bank.

Online bank transactions involve the same participants, with the addition of payment processing gateways facilitating online communication between the intermediaries. Each party in the transaction have their charges, which is the reason for the dynamic credit card fees.

how credit card payments work

Bitcoin vs Credit Card: Security Features

Security is the main catalyst behind the initiation and development of cryptocurrencies, focusing on shared control, decentralisation and preserving user data. These traits are totally the opposite of what credit card payments entail. Let’s review the differences between each system.

Crypto Payments Security

The blockchain is a shared ledger where all crypto payments are recorded and registered. Any user can access the blockchain and gain information on the transferred amounts, sender and receiver wallets and the used currency.

Bitcoin, for example, does not belong to a centralised organisation or government. Instead, it is maintained by a group of network developers who invest in the coin and work continuously to promote and improve blockchain security and scalability.

When you sign up for a wallet, you do not give your personal information, name, occupation or any other details, which preserves your data and does not expose you to identity theft.

Bank Payments Security

On the other side of the spectrum, paying with a card technically means allowing your bank to process your information with several third-party service providers for security reasons and process the payment to the recipient’s bank account.

Moreover, to create a bank account, you must submit your personal details, including your source(s) of income, addresses, contact numbers, and occupation. Then, all the information is electronically passed to KYC providers, who process and verify your eligibility to open an account.

Banks may not deliberately expose your personal identity, but having your details processed and delivered to different agencies makes it easier for hackers to infiltrate and steal your information or funds.

How Crypto Payments Solve Credit Card Problems

Immutability and interoperability are the main two features of decentralised payments that solve the shortcomings of traditional payment systems.

Chargeback fraud is a pressing issue for credit card payments, where buyers unjustly request a refund on their purchase even after receiving the product or service.

These claims not only cause merchants to lose money for sold items but also damage their reputations, as the credit card provider can ban merchants who receive multiple chargeback strikes.

Crypto payments put a limit to this issue because there is no Bitcoin chargeback, and once transactions are made, they cannot reversed.

cryptocurrency security

Additionally, bank payments have currency and region limitations, and some accounts might have restrictions that do not allow them to send money abroad or transact with a trusted third party.

On the other hand, cryptocurrencies are interchangeable with multiple blockchains and currencies thanks to network bridges. These tools facilitate transactions around the world and with any chosen party as long as they have a crypto wallet address.

Bitcoin vs Banks: Fee and Surcharge

Cryptocurrencies do not impose fixed transaction fees per payment for profitability reasons. Instead, Bitcoin transaction costs are used to compensate validating nodes and reward them for developing and maintaining the system.

Crypto payment fees vary depending on how fast you want the transaction to be processed and the congestion on the network. Typically, finalising the payment faster will incur higher gas fees.

On the other hand, banks make some of their incomes from card processing fees, charging customers on every transaction, which accumulate as more than one payment processor is involved. 

Additionally, banks earn returns from every monetary activity, such as check processing fees and service and account maintenance costs.

Do You Save Money with Cryptocurrencies?

It is reported that households and merchants could have saved billions of dollars if they used blockchain payments for account settlements instead of credit cards.

Businesses could have saved over $125 billion if they used cryptocurrencies to process payments rather than paying hefty bank card charges, sometimes levied without a proper credit card convenience fee sign.

Bitcoin vs Banks: Advantages and Disadvantages

Choosing between BTC and bank payments can be subjective. The security and convenience characteristics can vary widely. Therefore, let’s take a look at the pros and cons of these payment methods.

credit cards vs bitcoin

Paying with Bitcoin

  • Crypto payments are faster and almost immediate.
  • Crypto transactions are more affordable and incur fewer fees.
  • Bitcoin transactions are immutable and can’t be reversed.
  • Users can preserve their personal data without crypto payments.

However, due to their anonymity feature, decentralised transactions and platforms have always been targeted by hackers, stealing billions of dollars from wallets. 

Paying with Credit Cards

  • Payments are safeguarded by multiple security protocols.
  • Some banks offer insurance against fraud.
  • Banks offer a bunch of rewards and loyalty programs.

However, credit cards have higher fees than cryptos and collect user data, which can expose them to identity theft or leakage.


Choosing between centralised and decentralised payment systems is a hot debate, and many businesses are faced with the comparison of Bitcoin vs. credit cards. However, the answer depends on the business goals and target market.

For example, cryptocurrencies can interact with different protocols and virtual currencies, while cash transactions across borders can be costly.

Security and affordability are two essential factors in deciding between these two methods: which cryptocurrencies deliver better because they are less expensive, and the blockchain safety protocols are getting better year by year.

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