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Uninformed on this, but if thats true does that mean that a $3 starbucks coffee paid for in bitcoin would incur a $1 bitcoin network fee?

So likes 33% more expensive?

Or is there some system that el salvador developed that acts as a clearinghouse?

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El Salvador has their own national wallet app called Chivo. I would be surprised if El Salvadorans regularly use the actual Bitcoin blockchain (as opposed to just shuffling BTC between Chivo accounts) due to the huge and inflexible fees for on-chain transactions.

On chain fees are usually not more than $0.50 but if you paid on-chain (regular bitcoin transaction) then you'd be paying that (and have to wait 10 minutes for the confirmation). But most transactional purchases are done on lightning, a layer 2 system, which are virtually instant and very low in fees (like a cent or two).

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