Coinmama Review – Pitfalls to Know Before Trading

Coinmama is a cryptocurrency exchange which was founded in 2013. It calls itself the “friendliest exchange.” You can buy and sell crypto with fiat currencies. It offers a limited self-custody wallet and charges a hefty fee to trade.

Overall, Coinmama is simple to use, but limited in its functionality compared to the bigger exchanges like Binance. It won’t satisfy traders who want to actively buy and sell crypto, but users who are simply looking to make the odd crypto purchase will likely find it user-friendly. If you are interested in Coinmama, here’s what you need to know.

Coinmama Overview and Pros and Cons

Coinmama is not a state-of-the-art trading platform. It is a simple exchange that will cater to people who are starting out in crypto, or customers who will only be making a few transactions per year.

We’ve outlined some of the key pros and cons of Coinmama:

The platform is straightforward: it doesn’t offer a lot of bells and whistles. You can buy crypto with fiat currency and then convert crypto back to fiat. That is about it.

You can set up a self-custody wallet, which means you are in full control of your crypto at all times. Some people prefer a wallet hosted by the exchange (which is not offered by Coinmama) because then they don’t need to remember login phrases. However, self-custody wallets are more secure.

Coinmama has excellent customer support, something that is virtually non-existent on most other crypto exchanges. They also use encryption for all data transfers, making the trading process very secure. The downside is that Coinmama has very high fees – the highest I have seen.

This issue is compounded by the poor prices. Since Coinmama doesn’t let you trade with others, when you buy or sell you’re buying or selling from Coinmama… And they don’t always give you the best price. Between high fees and poor prices, Coinmama could be reducing the amount you get/receive by 5% or more.

The cryptocurrencies you can trade, and the fiat currencies you can use to buy them, are also limited. I’ll dig into all these points in more detail below.

Coinmama Fees and Loyalty Program

Here’s a look at what you can expect to pay when making a trade with Coinmama. They do have a loyalty program that reduces the fees.

Fees range from 0.99% to 3.9% when using Coinmama, depending on your loyalty level. This is a high fee. Binance fees, for example, are 0.1% or lower. Just based on the fees, if you spend $100 on crypto, after fees, once you receive your crypto it will be worth $96 to $99, assuming no price change.

Unfortunately, Coinmama also has a hidden fee. They are selling you crypto from their own inventory. This means they often don’t give you a competitive price. From its FAQ:

When doing a conversion, I found there was often a 6% or more reduction in the value of crypto received versus what was paid for. This is a combination of fees and a non-competitive price.

For example, when doing a transaction, if you convert $100 to crypto, the value of the crypto received will typically be about $93 or $94, not $96 to $99 as the fees would imply. Fees can be reduced by trading more volume.

Cryptocurrency and Fiat Currencies You Can Buy and Sell on Coinmama

First of all, here are the fiat currencies you can use to buy cryptocurrencies. These are also the only fiat currencies you can receive when you sell your crypto through Coinmama.

Coinmama Wallets

You will need to have a wallet in order to trade with Coinmama. They provide the option to set up a self-custody wallet through Coinmama, although this wallet is limited to receiving Bitcoin and Ethereum.

Many exchanges offer a custodial wallet – a wallet that is hosted by the exchange which you can access by simply logging into the exchange with your username and password. Coinmama doesn’t offer this.

Rather, you can use your own wallet with Coinmama, or you can set up a self-custody wallet via the Coinmama website. This means you fully control your crypto, and if the exchange goes bankrupt or disappears, your funds are safe in your wallet.

If you use the Coinmama self-custody wallet that’s offered on their website, it’s limited to receiving Bitcoin and Ethereum. If you are unfamiliar with how crypto wallets work, there is a tutorial here.

Coinmama Customer Support and Education

Coinmama provides more and better support than many other crypto exchanges.

Crypto exchanges are notorious for their glaring lack of customer service. With a number of other exchanges, it was difficult to get a hold of someone who could help, and it was often difficult to even find a page where I could message customer service or send an email.

Coinmama offers quite responsive customer support. It has a chatbot that can connect you to a live agent, as well as a contact form that you can fill out. Crypto Believers and Enthusiasts (loyalty program levels) receive faster support than newer clients (Crypto Curious level). That said, you can generally expect a response within 24 hours.

Also, for those new to crypto, Coinmama has an extensive Help Center to answer most of your common questions related to the exchange. For questions related to the crypto market itself, there is the Coinmama Academy. A well-laid-out series of articles that guide you through how the market works, as well as things you should know about crypto.

Coinmama Trading Experience

Coinmama is not ideal for trading. Rather, it is used to buy or sell cryptocurrencies with fiat currencies. Here’s how that works.

Coinmama is not recommended for “active trading” because of the high fees. However, if you want to buy a cryptocurrency, here’s are the steps you would take:

1. Create a trading account.
2. Log in and select the crypto you would like to buy and the fiat currency you want to buy it with.
3. Choose the amount you want to purchase, in either crypto or fiat.
4. Enter your wallet address to receive your crypto.
5. Choose your payment method to send fiat currency to Coinmama in exchange for your crypto.
6. Once you send the order, you’ll receive an email confirmation. If all the details are correct, click on the link to confirm the order.
7. Your payment will be sent and the crypto will be sent to the wallet address you provided.
8. The crypto will generally arrive in your account within minutes of the payment being confirmed by Coinmama.

Coinmama Payment Methods

Coinmama has an array of payment methods. These include bank transfers, online payment providers, and credit cards.

The following chart shows all the methods of payment accepted by Coinmama, as well as any additional fees charged for that particular payment option. If there is a fee, it is in addition to the trading fees charged on the actual transaction.

The “fine print” states that the $30 minimum amount only applies to a customer’s first order. After that, a $50 minimum amount is required, or higher where specified. Definitely go with the 0% bank transfers/wires if possible.