You can now pay for Bitcoin at Australia Post (with 5.9% in fees)

For only ~7% all up in fees and spreads you can start enjoying an impractical new payment method.

Bitcoin.com.au and Australia Post have announced a partnership that will let Australians pay for Bitcoin at more than 3,500 post offices around the country. It's accomplished through Australia Post's Post Billpay service, essentially letting you pay for Bitcoin like any other bill.

"Australia Post has for a long time played an important role in the community to make services accessible to all," said Susan Nicholson, Australia Post's Head of Business & Government Financial Services. "Post Billpay has been one of Australia's most trusted bill payment methods for over 20 years, and we're pleased to now provide the ability for Bitcoin bills to be paid at a post office, which will come with a product enhancement that offers ID verification and real-time bill payment confirmation back to the biller."

To use this payment method:

1. Make sure you have a cryptocurrency wallet ready to receive the funds.
2. Go the Bitcoin.com.au website.
3. Click "Buy Bitcoin".
4. Enter the amount you want to buy and your Bitcoin wallet address.
5. Verify your identity by providing some personal information (only if it's your first purchase).
6. Double check the details and lock in your transaction.
7. Complete your transaction by going into an Australia Post branch, showing them the locked-in transaction on your phone and making payment.
8. Experience a sinking feeling in the pit of your stomach as you realise you just paid a total of 5.9% in fees plus about 1.2% on the spread.

Great value, just not for the customer

The total cost of about 7% here consists of:

• Bitcoin.com.au's standard commission fee of 3.9% + GST
• A 2% surcharge for this particular payment method
• Roughly 1.2% on the spread

"The spread" refers to the difference between Bitcoin market prices and the price Bitcoin.com.au is selling it for. You can check it by simply looking at the current prices on Bitcoin.com.au, doing a Google search for "BTC AUD" to find the actual current exchange rates and then comparing the two.

If we do that, here's what we get at the time of writing:

To see how much difference this is as a percentage, we can can just plug those numbers into a percentage calculator.

Spreads naturally aren't exclusive to cryptocurrency. It's a good idea to do this kind of check whenever you're exchanging currencies or buying anything else with a market price to see how much you're actually paying.

If only there was a better way

Some parts of this cost are excessive, others are more par for course.

The 2% surcharge is perfectly normal. It's typical to find a surcharge whenever you buy Bitcoin with cash, which is the only practical reason someone would want to pay at an Australia Post branch. You have to visit the Bitcoin.com.au website to make the purchase anyway, if you use any payment method other than cash you can just go right ahead and do the whole thing online. For perspective, Australian exchange Coinjar charges a 1.5% surcharge for Blueshyft payments, while other Australian exchange CoinSpot charges 2.5%.

The 1.2% spread is alright. CoinSpot is showing a spread of about 1.5% at the time of writing, while other Australian exchange Swyftx is showing about 0.8%. Bitcoin.com.au's current spreads seem to be about par for course.

The 3.9% commission fee is bananas. CoinSpot offsets its slightly-higher spreads with fees from 0.1% to 1%. Swyftx does it the other way around, and offsets its slightly higher commission fees of 0.6% with some of the tightest spreads of any cryptocurrency broker in Australia. Both also provide a nice, easy cryptocurrency brokerage service and have a much wider selection than Bitcoin.com.au.

It gets even cheaper if you're happy to dispense with the brokerage service and just directly buy on the open market on exchanges like BTC Markets which get you within a hair's breadth of mid-market rates with typical trading fees of 0.2% or less on AUD/BTC pairs.

These numbers are actually insane. To put this in perspective, if you use this Australia Post payment method it could be:

• Easily more than twice as expensive as other cash payment methods at cryptocurrency brokers
• Well over five times as expensive as non-cash payment methods at cryptocurrency brokers
• More than ten times as expensive as some of the most cost-effective ways of buying Bitcoin

Opinion: With and without rose-tinted glasses

For practical purposes, such as actually purchasing Bitcoin, this new payment method is underwhelming, to say the least. It only seems to be practical for people who want to pay with cash (but don't mind providing identification), who don't mind paying truly majestic fees on their purchases and who can more conveniently get to a post office than a Blueshyft-supporting convenience store.

But that's probably too narrow a view.

Firstly, despite all the reports on the demise of cash, the cold hard currency is still plenty popular. Admittedly, most of the cash in circulation is being lost, hoarded or used for illicit purposes, but it still has a robust fan base. Plus, there's likely some overlap on the Venn diagram of cash hoarders and Bitcoin buyers, so there might be more demand than one would expect.

There's also still an understandable preference for cash as a trusted, tangible payment method and it's the perfect match for an entity like Australia Post, which is often ranked as one of Australia's most trusted institutions, especially in regional areas.

There's an argument to be made that when you buy Bitcoin with cash at Australia Post, the digital currency is infinitely more tangible than it would be any other way. Plus it's worth drawing attention to the partnership itself as an achievement, and as the joining of one of Australia's most venerable institutions with the idea of cryptocurrency.

"Our mission is to make Bitcoin safe and easy for every Australian", said Bitcoin.com.au Holger Arians. "For many people, paying for Bitcoin at an Australia Post office feels safer than transferring funds online—particularly for first-time buyers. We’re proud of this partnership and would like to thank Australia Post for their continued openness to new technologies."

"This is a major milestone for digital currency in Australia and around the world."

Unfortunately, that point of view requires rose-tinted glasses and a heavy prescription.

Once we take them off, that heartwarming story of trusted institutions partnering to advance cryptocurrency fades away, and it's replaced with a scene where a cryptocurrency platform with a snazzy URL takes advantage of people's trust to charge exorbitant fees. Bitcoin.com.au, of course, has no "official" relationship with Bitcoin because Bitcoin is not an entity and there is no such thing. It's not innately any more or less trustworthy than other exchanges. But newcomers in search of a trustworthy platform could get blinded by its URL and don't necessarily know that.

Plus, Australia Post's Post Billpay service has been around and enabling payments for a long time now. This almost certainly shouldn't be construed as some kind of big endorsement or giant leap by Australia Post.

It's great that people can feel comfortable buying cryptocurrency with a trusted payment method, it's great that people can surround themselves with trusted entities and it's great that Bitcoin is receiving a congenial nod from Australia Post, but it's less great that all this is being used as a vehicle to charge exorbitant fees.

And it's hard to see why those high fees would be necessary to cover costs. Australia punches above its weight in its number and quality of cryptocurrency exchanges and there are a great many examples of exchanges that do much more than Bitcoin.com.au, much better and at a much lower cost to customers.

Everything else aside, this looks a lot like a new way to take advantage of people's trust to extract high fees from them.

The royal commission into Australia's banks laid bare a similar scene, of formerly-trusted financial institutions deteriorating under the weight of their own protracted abuse of customer trust, after years of searching for maximum profit with minimum effort. There's something ironic about seeing crypto companies at risk of falling into the same hole after all the bank bashing and "don't trust, verify" speeches.

If you're shopping without the rose-tinted glasses, and with verification rather than trust, you can confirm for yourself that these fees are really high and that even if you want to pay by cash there's no reason to be paying this much.

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Disclosure: The author holds BNB, BTC at the time of writing.

Picture: Shutterstock