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IDProjectCategoryView StatusLast Update
0006126Talerdocumentationpublic2021-02-08 19:08
ReporterFlorian Dold Assigned ToStefan  
PrioritynormalSeveritytextReproducibilityhave not tried
Status acknowledgedResolutionopen 
Summary0006126: consider criteria for reasonable fee structures and deriving summarizing metrics
DescriptionThis could both be beneficial for customers and to exchange operators. It doesn't really make sense for any exchange to define a "EUR:10" coin, a "EUR:0.001" coin and nothing in between!

Some snipped from an email discussion related to displaying fees to the user in the wallet:

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What's also still missing is some way to view the fee structure of the
chosen exchange for deposits / refreshes. Though I have no good idea
how to represent this data in a user-friendly way. Showing the actual
fee structures might be useful for developers, but IMHO no actual user
would bother to look at them, nor even know how to interpret them. It's
also very hard to break it down into some more intuitive metrics such as
percentages, as it wildly varies based on what part of the fees the
merchant covers.

(This should be a separate discussion, but I'm writing it down here so I
don't forget about it )

One (imperfect) way to break it down would be with the following two
numbers:

 1. What is the "range" of money I typically would transact? This
depends on the largest and smallest denominations offered.

 2. How much does it cost you to keep money in your wallet? This would
be computed from the validity period of denominations and refresh fees.

 3. What's are the average total fees for payments (in percentage), and
what percentage of these fees can a merchant cover? (Merchants can
cover wire and deposit fees, not so much refresh fees).

So some output would be: "With the exchange exchange-eur1.taler.net,
typical transactions are between 0.001 Eur and 100 Eur. Fees for
typical transactions range from 0.1%-0.3%. Merchants can cover 90% of
these transaction fees. During one month, keeping digital cash with this
exchange costs you 0.1% on average.

Now it's very easy to argue "These numbers are useless! It depends too
much on the amounts, since we have this discrete coin structure". But a
good counterpoint to this would be that if it varies too much, the fee
structure is broken!

So maybe we can actually come up with a reasonable way to compare fees
under certain constraints, and then for exchanges that don't follow
these constraints, the wallet declares defeat and tells the user
"Warning: This exchange has a fee structure that is difficult to predict".
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TagsNo tags attached.

Relationships

duplicate of 0004117 closedStefan document fee structure considerations 

Activities

Christian Grothoff

2020-10-31 16:52

manager   ~0017077

See design-documents/008-fees.rst

Stefan

2021-01-12 20:01

developer   ~0017341

Design doc 008 focuses on fee schedule and metrics from the buyers'/users' point of view: https://docs.taler.net/design-documents/008-fees.html
Design doc 012 reveals different perspectives from users, buyers, and Exchange operators: https://docs.taler.net/design-documents/012-fee-schedule-metrics.html

Christian Grothoff

2021-01-30 23:56

manager   ~0017471

Is this done?

Stefan

2021-01-31 12:08

developer   ~0017473

I don't assume this issue to be entirely solved, and there are some open questions we should better keep in mind.
If we take a look on the Design doc 012 (https://docs.taler.net/design-documents/012-fee-schedule-metrics.html), we have an overview there on

- all of the fee types (13.13.2. 'Background'),
- conflicting fee criteria an Exchange needs to satisfy (13.13.3. 'Motivation'),
- abuse scenarios and measures against abuse (13.13.4. 'Proposed Solution'), and
- the pitholes and constraints an Exchange operator has to be aware of (13.13.6. 'Drawbacks').

This issue 0006126 raised three questions that are important and not yet fully answered to my point of view:

 1. What is the "range" of money I typically would transact? This depends on the largest and smallest denominations offered.

>> This question should be discussed from an Exchange operator's perspective: Am I focusing on users who are going to trigger micro-payments with (very) low denominations and relatively high fees per coin, or is my normal target group ordinary buyers on small/medium web-shops (who want a simple fee schedule and not to be bothered with sophisticated fee structures) or is my typical audience wiring extra-large amounts of money around the world with the urgent need of privacy in between sender and recipient (who don't care about fees rates at all)? The discussion outcomes will also affect fee levels and the range of coins/money, I suppose.

 2. How much does it cost you to keep money in your wallet? This would be computed from the validity period of denominations and refresh fees.

>> Answers to this question may be:
- "Buyers are expected to consider the refresh fee as an unexpected nuisance",
- "nominal refresh fees are most likely needed in case of malicious activity",
- "fees for getting change are very uncommon in other payment systems",
- "not charging refresh (and refund) fees all the time exposes an Exchange operator to potential losses for a period of time until such fees can be introduced, which may be weeks or months depending on the denomination key rotation frequency"
- "[normal bank customers and buyers are commonly] inclined to complain about negative interest rates",
- "in case there are no refresh fees, consumers may choose to hoard digital cash, which may create a legal and (negative) interest liability for the operator".

These few answers depict the whole decision dilemma for any Exchange operator. Citations stem from the Design doc 012.

 3. (a) What are the average total fees for payments (in percentage), and
 (b) what percentage of these fees can a merchant cover? (Merchants can cover wire and deposit fees, not so much refresh fees)?

>> (a) A flat percentage will unlikely be seen as a "flat percentage structure cannot technically be achieved for the unit denomination (where the fee basically has to be zero or 100%)". Thus, there will most probably persist a mixed fee structure with variable fee rates for the different denominations an Exchange offers. But: A successful Exchange will show to its users a good reason for believing that its fee rates will stay at the same level for a very long period of time (rather decades than years). This builds trust and copies the success stories of other payment services. -> We have to know the real costs of operation.

(b) Refresh operations do not directly affect sellers. The wire fee is to be paid by the sellers, they have to decide how often they have their turnover wired to banking accounts mostly for liquidity purposes. If an Exchange charges wire fees to high, sellers can alocate them via max_wire_fee. The same applies to deposit fees: Sellers determine the default maximum amount want to bear by configuring the variable default_max_deposit_fee.

I am curious about further opinions regarding answers to these questions.

Stefan

2021-02-08 19:06

developer   ~0017515

I'm giving up for now trying to find a slick solution.

We should keep this issue in the back of our minds, maybe once another discussion will get a chance.

Issue History

Date Modified Username Field Change
2020-03-13 13:44 Florian Dold New Issue
2020-07-16 15:23 Christian Grothoff Severity minor => text
2020-10-11 21:16 Christian Grothoff Category other => documentation
2020-10-31 10:10 Christian Grothoff Relationship added duplicate of 0004117
2020-10-31 16:52 Christian Grothoff Note Added: 0017077
2020-12-04 12:23 Stefan Assigned To => Stefan
2020-12-04 12:23 Stefan Status new => assigned
2021-01-12 20:01 Stefan Note Added: 0017341
2021-01-30 23:56 Christian Grothoff Note Added: 0017471
2021-01-31 12:08 Stefan Note Added: 0017473
2021-02-08 19:06 Stefan Note Added: 0017515
2021-02-08 19:08 Stefan Status assigned => acknowledged