If 1 million people send bitcoins to the sites pooled addresses in a single site-owned wallet, all of their accounts will be credited with what they sent. Then, those 1 million people send their coins to a business that also has an account on that site. The coins inside the sites wallet never move, but are still in 1 million different wallets. The business then tries to withdrawal their total received coins to their own private offsite wallet.
How does this save on transaction fees? It takes 1 million transactions to send to the site, and then it takes another million to send to the business offsite address. If anything, the total transactions are doubled, thus doubling the fees. The only advantage to this would be that the business could trust the site and know that the customers instantly has the correct amount of coins.
Where is the savings taking place? Is it merely just a matter of "batching" payments together for the chain? That is, bundling 1 million payments into a single 'transaction'? I didn't think the savings in doing this were too significant.
They send to multiple users in one transaction. It will only decrease total transaction fee.
Take faucets for example. With most you do not pay any fees to get the dust to your wallet once it reaches a certain level. I guess there is a 'fee' built in on the side of the owner of the faucet i.e. he gets charged a percentage on total payments to be made from his faucet.
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You sometimes have to spend more Bitcoins than the dust you get.
Xapo is advertising their service using faucets. AFAIK, Xapo does not charge any fees, they cover 'em all. Other micro-payment processors and faucet owners running their own daemons pay service fee(usually, 3%-5%) or transaction fees(usually, 0.0002-0.001BTC/week).