Transaction Fee
Quick Answer
Transaction fees combine network fees (gas) and service fees. Crypto gateways typically charge 0.5-1.5% versus card payments' 1.5-3.5%, with even larger savings on cross-border transactions.
Full Definition
A transaction fee is the cost of processing a payment, combining network fees (gas) and service fees (from the payment provider). Traditional card transactions charge 1.5-3.5%. Crypto payment gateways typically charge 0.5-1.5%, with lower network fees on Layer 2 chains. The total fee structure is a major advantage of crypto payments over traditional methods, especially for cross-border transactions where traditional fees can exceed 5%.
Related Terms
Testnet
A testnet is a separate blockchain using valueless tokens for development testing. Payment integrations should always be tested on testnets (Sepolia, Amoy) before mainnet deployment.
Token
A token is a digital asset created on an existing blockchain via smart contract standards (ERC-20, BEP-20). Payment gateways convert any supported token to the merchant's settlement preference.
Tokenisation
Tokenisation represents real-world assets (property, equity, invoices) as digital tokens on blockchain, enabling global transfer, fractional ownership, and programmable payment models.
Transaction Hash (TxHash)
A transaction hash is a unique hexadecimal identifier for a blockchain transaction, used to track payment status on block explorers and provide irrefutable proof of payment.
Travel Rule
The Travel Rule requires VASPs to share sender/receiver identification for qualifying transactions, originating from FATF Recommendation 16 to prevent money laundering in cross-border crypto.
TVL (Total Value Locked)
TVL is the total crypto deposited in a DeFi protocol's smart contracts. Higher TVL in liquidity pools means deeper liquidity and better exchange rates for payment settlement.