https://blockchain.info/charts/cost-per-transaction
Roughly, you're paying the miners. They (half of them) have to mine your transaction into the blockchain and they could be using that time to mine. So your transaction competes against mining time.
That's roughly why it's slow and expensive. I'd never use BTC unless the kidnappers demanded it.
The actual transaction costs are way under a dollar, and it is, by far, the cheapest way to move the money, it's cheaper than the European SEPA, which is normally 0.9 EUR.
Bitcoin is a very expensive and inefficient way of transacting.
I've found that this would up the cost quite a bit but it's possible there are cheaper ways of doing it that I'm not yet aware of.
The 12.5 BTC per block is given to the miners as incentive to keep mining and verifying the transactions. Also, the cost of mining rapidly converges on 1 BTC per 1 BTC mined (both theoretically and in practice). Thus, that is actually the cost for the bitcoin system to process transactions.
(Ignoring for the moment the BIP66 incident and the discovery that many miners were literally not bothering to actually verify the previous block, in order to save a few seconds per block.)
This is slow. It's not cheap simply because it's done on cheaper HW.
Also, not every miner must do this work. The transaction "clears" as soon as ONE miner solves the puzzle then includes the transaction in that block. The other miners only have to verify it which takes a only a tiny fraction of the amount of work needed to solve the puzzle.
It is slow but it's almost always faster than international (as well as domestic for some of us) wire transfers. Also, there are a lot of people working to make it faster.
It's currently a pretty crap currency for most people in the world but it has potential to completely change the world. This potential is reflected in the market cap.
When you remove the block reward of 25BTC, it's cheaper than most methods of money transfer.
I've transfered as much as $1000 for around 2.3c.
The network basically decides that providing the last 10 minutes worth of processing power is worth 12.5BTC and amount decreases every 4 years so the "group cost" will drop while the "individual cost" will rise.
This is why the "fees are high" issue has come up, Bitcoin just reduced the block subsidy to 12.5BTC as opposed to 25BTC, while in the 50BTC era, transactions were often free of any charges.
Even with all of that, an average user will pay less than the credit card fees charged to the shop so most shops would be wise to accept it, even if only to sell it for USD immediately.
If you're also counting the costs of running the network, you should call up Visa and ask them how much it costs them for you to be able to buy a cup of coffee with your credit card. The number will be so much higher.