The marketing machine Revolut has come up with another use for Crypto. Or have they? You can get 1% cashback if you buy things (like a pint of milk as professed by The Times) with cryptocurrency held in your Revolut account.
But does getting 1% cashback but paying 1.99% in exchange fees when you (sort of) buy things with crypto on Revolut sound like a good idea?
That’s right, it’ll cost you nearly 2% if you are a basic account holder to convert your crypto into GBP, for premium and metal users that fee reduces to 1.49%.
One of the key criticisms and barriers for crypto being a mainstream currency is that it is far slower than the payment networks for real-time purchases. until that changes, “crypto purchases” are really just a marketing gimmick, it’s not even an offer. In fact, as powerful as the blockchain is, it still doesn’t update fast enough for practical payments.
Here are two reasons why paying for things with crypto through Revolut doesn’t make sense.
- The value of crypto moves about massively. Over 6 months the price of Bitcoin is down nearly 40%, GBPUSD is down 7% in comparison. In the real world, a £1 pint of milk is still £1, but if you are using crypto you bought 6 months ago to buy it it will cost you £1.40. To be fair though, Bitcoin is up nearly 3% over the last month, so it would actually be cheaper if you are buying using recently purchased crypto. But, volatility is the point here.
- Even though you are getting 1% cashback, you will still be charged 1.99% in exchange fees for converting the crypto back into GBP. So you are not actually buying anything with crypto, you are making the purchase with a fiat currency (GBP). If you’ve bought your crypto as an investment because you think it will go up, you are better of using your GBP rather than crypto for purchases.
But in the interest of being balanced, we must point out that there are reasons that the Revolut crypto cashback offer is a good thing.
- It’s a cheaper way of selling your crypto. Revolut, is actually one of the cheapest places to buy and sell crypto. Coinbase charges up to 3.5% on buys and sell. eToro is a little cheaper at 1%, but you can’t hold GBP on account, only USD. So if you have some crypto on account and are planning on selling it to buy some milk, it would be cheaper to use the crypto payments option.
- If you’ve bought some crypto and the price has gone up, you haven’t actually made any money until you’ve sold it. So by using the crypto payment option, you’re locking in profits and putting them to good use (depending on what you purchase of course).