You can't charge only a 3% fee when the BTC value could rise or drop by 10% the next day.
So let's say the provider buys BTC from an exchange to stock up their ATM. Then the price of BTC drops 8%. If the provider only charges say 5%, then any BTC that ATM sells is at a loss. Then a week later BTC rises by 10% and that person who purchased from the ATM comes back and sells that BTC back to the ATM at a profit for them, and a loss for the provider.
Crypto volatility necessitates higher fees to ensure you operate at a profit
That's not how it works. Bitcoin is not "stocked" in bitcoins. When you buy bitcoin you specify something like .0065 BTCs (about $100) or a dollar value. The transaction occurs while you optionally wait which can take half an hour or so before it's confirmed on the blockchain. The ATM provider buys from an exchange at current prices and adds the premium to it.
The premium of 10-20% reflects the low ATM volume and is needed to pay for the ATM capital and service costs.
Both of your theses, your analyses, your explanations, sound completely plausible, each taken stand-alone. On the other hand, obviously those are two very different explanations, contrasting ones.
I have to ask, are you simply guessing at this, one or both of you? Which is fine, informed guesses can be useful, and both explanations work: but do we actually know what is factually true, as far as these amazing "fee" levels? (The scare quotes, because it's difficult to wrap one's head around the concept of someone charging a fifth, sometimes even a quarter, of your money, just for the privilege of withdrawing your own money!)
marting, I do see one difficulty with this thing, one obvious difficulty with how you explain it, even though otherwise it makes sense. These people who're putting up these ATMs, presumably it's not just some guy with 10K to spare, who's trying to hustle up a small income stream by setting up a solitary ATM machine; but instead a firm, a company, that puts up multiple ATMs. Same as regular ATMs, except perhaps smaller in scope. So, why on earth would they ensure that their business never ever grows, by charging such extortionate sums? Any ATM, dealing in any currency, is guaranteed low volumes, ridiculously low volumes, should they go around charging $20 to $25 per $100 withdrawn. Why not do the common sense thing, and charge more sane amounts, in the expactation that volumes will pick up, to some extent at any rate even if not as much as regular "fiat", and that those higher volumes will offset the investment and hopefully earn a profit, eventually if not immediately?
(Again, I don't really know how these things work. Do they also 'buy' BTCs, that is, can you also withdraw cash off off your BTC holdings? I'd imagine so, if they're not, as you say, buying and stocking, but simply passing it on by buying/selling afresh. Because if so, then BTC investors can use these things sometimes to withdraw regular cash. Our fellow forum member, for instance, whose name/handle still escapes me, who makes a comfortable living entirely off of his BTC and other crypto investments. That itself can be one huge boost to volumes, such withdrawals, should fees be kept at sane levels.)
Of course, to say that this kind of business model militates against common business sense, is not to say that the explanation is wrong. I mean, it is what it is. Musk's doing completely weird things, insane things, with Twitter, that defy any kind of logic, and that doesn't mean he isn't doing them. Still, these ...holes, in this kind of a business model, seem so very standout, so very obvious, that one can't help wondering about them.
