Q: How much would Canadian merchants save by switching to the Bitcoin network? A: About $9 billion per year.

Credit card transaction fees are around $9 billion per year in Canada. To process those transactions using Bitcoin would cost 1/100th of that: only $90 million. Read on for the math.

Credit Cards: 3 billion transactions, $9 billion in fees

Senator Ringuette in 2012 put the "acceptance fees" for credit cards in Canada at around $9 billion on $322 billion in sales (and taxes collected). A 2012 Bank of Canada study agreed with the Senator's figure ("over $300 billion") and estimated the average transaction was "just over $100" (page 32). If we assume the average transaction was $100 then that's 3 billion transactions per year.

Bitcoin: $90m to Process 3 Billion Transactions

The typical Bitcoin transaction fee is 0.0001 bitcoins. One bitcoin currently trades for around $300 Canadian so that fee is 3 cents CAD per transaction ($300 x 0.0001).

3 billion transactions processed using Bitcoin would cost approximately $90,000,000 in transaction fees.

$320m in Terminal Costs

In addition to the transaction fees, the typical merchant pays around $40 per month per terminal according to the Bank of Canada. The number of terminals is hard to come by but Senator Ringuette put the number of merchants in Canada at 670,000 in 2012. Even if each merchant has only one terminal that's 670,000 x $40 per month x 12 months = $320 million in terminal fees. The actual number is undoubtedly much higher since many retailers have multiple terminals.


There are many simplifying assumptions in this blog post. One is that Bitcoin transaction fees would remain so low even if Bitcoin was much more popular than it is today ($300+ billion in Bitcoin transactions would certainly move the market). I've also assumed that there wouldn't be other fees charged (similar to terminal fees - someone needs to provide the processing infrastructure).

Another important assumption that this blog post makes is that acceptance fees are actually fees. The truth of credit cards is that many of the fees that merchants are charged are returned to customers through rebates and points. That said, this amount is probably similar to the amount merchants lose in consumer fraud (although lately reduced by chip-and-pin). Credit cards and Bitcoin are complicated subjects but there's a lot of room for my math to be wrong when Bitcoin is around 99% cheaper.