When buying or selling crypto, you might think you’ve been charged too much or you should have received more crypto based on the exchange rate and the amount you spent. There are two main reasons behind this misunderstanding: price differences in different parts of the app, and the service charge (fee) for buying and selling.
Let’s take a closer look at how Luno’s instant buy and sell transactions work, so you’ll have a clearer understanding of what exactly you paid for.
Example 1: Price differences between screens
For this example, let’s say you want to sell Bitcoin (BTC) and your local fiat currency is Nigerian Naira (₦).
When you enter the amount of crypto you want to sell, you’re shown an estimated amount of money you’ll get. However, the next screen with the transaction details shows that you get less than you expected. Where did that extra money go? Were you charged too much?
Where’s the “missing” money?
There aren’t any extra, hidden charges for your transaction. Your fee/service charge is exactly as shown (2% in this case). What happened here is that these two screens calculate the price of crypto differently.
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On the first screen, when you enter the amount you want to sell, you get a quick, approximate currency conversion. This screen determines a crypto price based on recent historical trades on Luno. In our example, this screen used a BTC price of around ₦99.9 million for its calculation (instead of ₦94 million, as seen on the next screen). This is because recent trades were completed for ₦99.9 million.
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The second screen, showing the transaction details, is your actual price quote. It uses a more in-depth calculation, taking data from Luno and our liquidity providers, based on open trades that have yet to be executed. This is the only screen that shows you the exact amount you’ll get when you complete the transaction. The approximate amounts and prices on other screens should not be interpreted as your final quote.
Tip
Follow this link to learn more about why the instant buy/sell quote is different from the prices shown in other parts of the app.
Example 2: The instant buy/sell fee
For this example, let’s say you bought Bitcoin (BTC) using South African Rands (R) as your local fiat currency. You paid R1,000 to buy BTC 0.00090703, and the price of Bitcoin at the time was R1,080,870.
When you look back at the details of that transaction, here’s where some confusion might arise:
Where’s the “missing” crypto?
In this example, R20 worth of crypto went towards the fee or service charge (2% of the amount bought).
The correct calculation for buying:
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Take the amount you bought in crypto,
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plus the service charge (fee) in crypto,
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then multiply that total by the price.
The correct calculation for selling:
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Take the amount of crypto you sold,
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minus the service charge in crypto,
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then multiply that total by the price.
What’s the service charge fee for?
When you buy or sell crypto using your Wallets screen (also known as Instant Buy/Sell), you’re provided with a user-friendly interface to complete transactions quickly.
This method of buying crypto also guarantees that:
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You can buy the full volume of crypto you asked for
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The full volume of crypto you want to buy will be settled immediately with you when you accept the quote
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The price you are quoted is valid for 60 seconds, even if the actual market price moves during that time
The service charge is a premium for buying and selling instantly with all these guarantees. It’s up to you to decide if you want to accept the price offered or not.