How the Bitcoin exchange rate is determined
From a cost/exchange rate perspective, we like to think of this from a Total Cost of Services standpoint:
When sending funds to an exchange, you typically have to send an international wire, which costs $45 on average and can take 3-5 business days. Some local exchanges allow you to use the ACH system, which takes 2-4 business and locks in the price before the funds get there (this has tax implications). Some systems enable instant buys, but the limits on these features are prohibitive for paying a group of employees. Our system hooks into the back of any payroll system, costs nothing for the transmission of funds, enables same-day payments for Premium users and next business day payments for non-premium users and places no limits on the size of the payroll (permitting that it is actually a payroll payment). More details on Bitwage Premium here.
While we won’t always offer the best exchange rate on Bitcoin, we are always working with partner exchanges to get get the lowest rates possible. The resulting rate factors various costs we incur in order to manage next day payouts without limits. However, when you compare the fees of other exchanges and the cost of sending funds vs our exchange rate and convenience (ease of use, next day and limitless), the total costs of services are lower.