What is a transaction fee?
Transaction fee is the amount of money withheld by a bank, financial institution or service provider when transactions take place. They cover the costs of implementing the trade that the service provider incurs.
Such costs might include salaries for employees, computing costs or storage space. Incidentally, it is not necessary to charge transaction fees. Sometimes, the service provider or the bank absorbs the amount. However, it can be said that nowadays, such fees are more the rule than an exception.
Transaction fee amounts
The amount of a transaction fee depends, of course, on the type of money transfer. If the banks’ expenses increase with the amount of the transactions, the fee is usually charged as a percentage of the total.
If this is not the case, the transaction fee is independent of the value of money transferred. A well-known example of the latter is the fee charged on the purchase and sale of shares.
Banks usually charge their customers a fee that is always the same, regardless of the number of shares purchased. With cryptocurrency, it is currently the case that different transaction fees are charged depending on the provider.
For those investing large sums, a fixed fee is normally more advantageous. Conversely, a proportional charge may serve small investors better. In general, transaction fees for crypto money are perceived to be relatively low.
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