How Much Does It Cost To Send A Lightning Payment?
So, you'll remember from our discussion of credit cards, that these old payment rails are expensive. Really expensive.
At the very least the merchant has to pay about 3% of every transaction to the banks. And if you are paying in a foreign currency -- watch out -- because then you'll be paying at least 2% or 3% on top of that.
Are Lightning fees cheaper than that?
Yes.
Much cheaper.
Much, much, cheaper.
In fact, fees on the Lightning Network are so cheap, that nobody uses percentages to express them!
Lightning wizards use another metric with a catchy name: PPM
PPM: Parts Per Million
You see, lightning fees are so low, that it gets confusing to use percentages.
This may change in the future, but as of this writing, if you send a payment over a routing node, that routing node would be considered to have "reasonable" fees if they charge about 1,000 PPM.
That's one thousand (1,000) out of ONE MILLION (1,000,000).
In percentage terms, that is 0.01%.
Let's look at some sample fees:
Some sample fees
| Payment Amount | Lightning | Credit Card (3%) | Foreign Card (6%) |
|---|---|---|---|
| $5 | $0.0005 | $0.15 | $0.30 |
| $500 | $0.05 | $15.00 | $30.00 |
| $5,000 | $0.50 | $150.00 | $300.00 |
This assumes 1,000 PPM for Lightning fees. Yikes, that is quite a difference!
Now, like everything on the Lightning Network, this can get a bit more complicated -- so complicated, in fact, that there are still researchers like Rene Pickhardt doing basic scientific and theoretical work on this topic.
Sometimes fees are below 1000 PPM...
If you run your own node, and you want to send a payment directly to another node, AND you currently have a direct channel with that node, then your payment will have no fees. So if two nodes transact often with each other, they can open a direct channel, and send payments without any fees!
Sometimes fees are above 1000 PPM...
If your payment is going to route over 5 or 10 nodes, on the way to its recipient, each node could charge a fee. Historically, even with payments that make multiple hops, it is rare that a payment would cost more than 5000 PPM, in total, and often much, much less. Many payments, even with multiple hops, will complete for less than 500 PPM -- fully 60x cheaper than the cheapest credit card transaction!