As Bitcoin and other crypto-currencies become mainstream, the casual investor is increasingly looking for ways to purchase these digital assets in the most efficient way possible.
Coinmama is one of the more established cryptocurrency exchanges and offers a service which provides just that.
Coinmama is also known as something that people term a “Fiat Gateway”. These are essentially exchanges where people are able to exchange their fiat currency for a cryptocurrency. There are other established exchanges that that offer this service, so how is Coinmama different?
In this comprehensive Coinmama review, we will take you through all the steps that are required in order to buy cryptocurrency on the exchange. We will also take an in-depth look at the security, customer support, fees and user experience.
Let’s jump right in.
- 1 Overview
- 2 Is Coinmama Safe?
- 3 Coinmama Fees
- 4 Asset Support
- 5 Funding / Withdrawal Options
- 6 Coinmama Customer Support
- 7 Ease of Use
- 8 Registering & Verification
- 9 How to Purchase
- 10 Coinmama Competition
- 11 Conclusion
- 12 Coinmama Ratings
This is made possible by integrating with Simplex, a fin-tech company focused on online payment processing and fraud. They process credit card payments for goods and services sold online.
To some, Coinmama is not considered an exchange because you actually can’t trade crypto currencies on their site. Currently, its only purpose is to act as a fiat gateway where people can buy crypto currencies with their credit cards.
The platform has been around since 2013 and has built a strong reputation in the crypto community. They’re registered in Slovakia, but are owned by New Bit ventures, which is headquartered in Israel.
Coinmama is also available in about 226 countries, including 23 states in the US.
Is Coinmama Safe?
Coinmama doesn’t store credit card details on their server, and requires identity verification before any crypto currencies can be purchased. You have to enter your name address and submit a valid ID.
Coinmama also uses Trust Guard and Comodo to ensure your security (both using 256-Bit SSL encryption on pages that contain private information). However, no 2-factor authentication is used, which means your password must be extra secure to prevent theft. Also, Coinmama is a centralized exchange, meaning they have 1 single point of failure and are more likely that decentralized exchanges to expose your personal information.
Lastly, Coinmama not offering an online wallet could actually be seen as a benefit because it forces users to setup their own digital wallets, which makes the transaction and storage of crypto-currencies ultimately more secure. This is unlike other centralised exchanges that hold your private keys.
Coinmama charges very high fees. The Bitcoin and Etheruem prices shown on their website include a 5.9% fee. Plus for credit/debit card transactions, their processors charge an additional 5.00% fee (this fee is added after choosing your method of payment).
This brings the total fees to 10.9%.
By comparison, Coinbase charges 4% fees for credit and debit card transactions, 1.49% fees for transactions made from your Coinbase online wallet, and 1.49% for purchases made directly from your bank account.
Coinmama offers the 3 main crypto currencies; Bitcoin, Ethereum, Bitcoin Cash, as well Litecoin and Cardano (ADA). While this is one more coin than on other exchanges such as Coinbase, it is still much less than other Fiat gateways such as Kraken.
Of course, there is nothing stopping you from buying one of these coins on Coinmama and then sending your coins to a larger exchange such as Poloniex or Binance to purchase the Altcoin of your choice.
Funding / Withdrawal Options
Coinmama doesn’t ever store your crypto-currencies on their site, so there are no funding/withdrawal options. When you pay for coins, your coins immediately transfer to your wallet (although in some cases it takes 24 hours or more to process).
While the fees are pretty high for the purchase, there are no charges for the coins to be sent to your address. There are a number of exchanges that will charge a fee or have a minimum withdrawal requirement.
Coinmama Customer Support
Coinmama’s website features a help center where you can type in the keywords for any questions you have and it will direct you to an article written in its ‘knowledge base’.
They also have a contact page where you can enter your email and details of the problem you’re having. They typically answer within 24 hours which is about the standard response time for most exchanges. They also respond to comments or direct messages on their Facebook page.
Ease of Use
The ability to use a credit card makes Coinmama a great service for first-time crypto currency buyers.
However, no online Wallet is offered, which means users must know how to setup their digital or offline wallet before making any purchases on Coinmama.
You also can’t send your purchased coins to addresses that aren’t yours (you have to verify your wallet address by first clicking on a confirmation email that is sent to you before making a purchase).
Lastly, although ID verification makes the service more secure, it also means you can’t instantly purchase coins when visiting the site for the first time. You may have to wait a few hours or even days.
Registering & Verification
Sign up by entering your email, password and other details required below, then click ‘Create Account’.
Coinmama will then send you an email address to verify your account. Once you click on the email, you will be redirected back to the site.
In order to begin purchasing coins, you need to first verify your identity.
The site has 3 levels of verification, each requiring more details for verification than the last. Level 1 allows you to buy up to $15,000 of Crypto currencies, level 2 allows up to $50,000, and level 3 allows up to $1 million.
For verification level 1, the site asks you for your full name, phone number, date of birth and address.
You then have to fill in your official ID number and expiration date. The wait time for verification can take anywhere from a few hours to a few weeks.
Last year Coinmama was allowing users to purchase up to $150 in Bitcoin without identify verification, however that doesn’t seem to be the case anymore. This could be in response to stricter KYC (Know Your Customer) and AML (Anti Money Laundering) regulations.
You now need some form of government-issued ID to buy an amount of crypto currency.
How to Purchase
Once your identification has been verified, you can begin purchasing crypto -currencies from any of the various options on the sidebar menu:
Click ‘Buy Bitcoin’ to enter the purchase page. Here you can choose various packages that Coinmama offers for buying Bitcoin, or you can scroll further down the page to buy a specific amount. The specific amount option allows you to move a slider left or right to indicate the exact amount of Bitcoin you want. The minimum purchasable Bitcoin per day is 0.011 (or ~$100), and the maximum is 0.563 (or ~$5,000).
Once you’ve selected the amount of Bitcoin you want, the exchange rate at the time of your upcoming purchase is locked in. This means you will receive the exact amount of crypto-currency you ordered, regardless of market fluctuations that occur while you enter your payment information.
Next step is to select your method of payment. After putting in your credit card information, enter your Wallet address then click ‘Complete Payment’.
Once the payment details are accepted, the Bitcoin will be sent to your Wallet address immediately. If for whatever reason your order aborts, Coinmama reverses the money into your bank account within 48 hours.
Unlike Coinbase and other exchanges, Coinmama doesn’t offer an online wallet, which means users should already have a wallet setup before they start the process of purchasing crypto.
For security reasons, Coinmama does not store your credit card details on their servers. Coinmama also uses Trust Guard and Comodo to ensure your security. Both security specialists use 256-Bit SSL encryption on pages that contain private information.
You can click the ‘Orders’ button on the sidebar menu to review your orders:
While Coinmama is clearly an attractive method to exchange your Fiat for Crypto directly to your wallet, there are alternatives. These include others with more centralised and decentralised options. Below is how Coinmana stacks up to their most likely competition.
Coinmama vs. Coinbase
- Coinbase is a much more popular service (34 million visits a month compared to Coinmama’s 600,000 visits per month)
- Unlike Coinbase, Coinmama is a ‘buy only’ exchange. You can only purchase crypto-currencies using your credit card, then transfer them to your digital or offline wallet for storage. Coinbase allows you to purchase using a debit/credit card, as well as a direct deposit from your bank account, and a wire transfer. Coinbase also has an online wallet for storing you crypto-currencies, and you can send those funds to other wallets that aren’t yours by entering their address.
- Coinmama charges higher credit card fees than Coinbase (5.9% compared to 4.%).
- Coinmama is only accessible on the web and mobile browser, while Coinbase features a mobile app.
- Coinbase is the more popular service, has more funding and more usage. However, this also means that it may take longer for them to respond to users questions.
- Coinbase is based in San Francisco, while Coinmama is based in Slovakia. This distinction may affect how much personal information users are willing to disclose when signing up.
Coinmama vs. Local Bitcoins
- Local Bitcoins and Local Bitcoin cash offer a peer-to-peer service for exchanging coins. This makes it more efficient because no ID verification process is required, and users can get their crypto quickly by simply meeting up with the person they are exchanging with. Some may prefer this process as it allows you to transact with a real life person, that way you know when you make a payment, you’re guaranteed to get your crypto-currency in exchange.
- No important data is inputted on LocalBitcoins site, so you are less likely to lose vital information if a hack occurred. Coinmama requires you to enter your official ID, which as an international company could put users at more risk.
- There are virtually no fees incurred for making exchanges on Local Bitcoin or Local Bitcoin Cash.
- One advantage Coinmama has over Local Bitcoin is that it is registered with FINCEN (the Financial Crimes Enforcement Network) in the US as a money service business. This protects them from being shut down, and gives their users confidence that they are operating legally.
Overall it seems like Coinmama is trying to provide users with the security of Coinbase, while also making transactions fast and efficient. However, when you consider how long it might take to go through the ID verification process, the transaction process is actually quite slow.
Crypto currency prices are highly volatile, so when a user decides to buy Bitcoin on at a particular price, they don’t expect to wait several days for their ID to be verified before they can purchase the coins. In the process of waiting, they could easily sign up to Local Bitcoin and purchase their coins from someone in the area.
Furthermore, users who expect privacy would not want to go through the ID verification process, nor would they want to input their credit card information. Financial institutions are not yet comfortable accepting transactions from crypto currency services, and may try to block or reverse transactions made on Coinmama’s site.
In the case of local Bitcoin and Local Bitcoin cash, they only assume the role of intermediary between you and the person who is selling the crypto currencies.
This minimal verification peer to peer system allows for the most wide-scale adoption (as shown by Local Bitcoins 6 million monthly website visitors).
Ultimately, Coinmama should decide if they want to be more feature-heavy like Coinbase, and offer an online wallet for storing and sending crypto, or if they want to lower the barriers to entry and be leaner like Local Bitcoins.
Whichever direction they choose would give users a much better experience compared to what is currently offered.
Featured Image via Fotolia & Coinmama
- Easy to Use
- Card Purchases
- Strong Customer Service
- High Fees
- Limited Asset Coverage