As the digital world is rapidly moving from traditional payment and onboarding process towards a distributed and real-time one, there is a greater demand to optimise traditional processes. Figures show that users favour mobile apps instead of desktop services.
Decentralised technology brings with it a faster transaction rate, and more secure form of payments. Due to which merchants are adopting newer techniques. This is especially convenient for e-Commerce platforms. When it comes to electronic transactions, merchants have to rely on an intermediary who will validate the source and then approve it. Not only does it increase the costs but requires longer time. Instead, the advanced technology allows you to use computer nodes which work automatically on the basis of logic to process transactions, track and record them.
What exactly is Blockchain?
Simply put, the concept of blockchain technology is to digitally capture the records of any transaction encrypted with a cryptographic value. The transactions are called “blocks”. All the blocks have a timestamp and data about the transaction. All blocks are linked together to form a blockchain. This means that even if Blockchain allows you to remain decentralized without giving up integrity of each transaction.
A lot of companies are using blockchain technology to secure data which includes medical records, events, votes, and financial records.
Blockchain to transform eCommerce
e-Commerce platforms host a plethora of digital data such as transactions, financial records, receipts, order history, fund sources and as well as actionable records related to payments and orders.
Alternate Payment Methods
Bitcoin and other cryptocurrencies were perhaps the first practical implementation this world saw for blockchain. The revolutionary trend received immense popularity and reach on a global level. Now, the use of cryptocurrencies has become very common. On e-Commerce platforms customer very much like using PayPal, Stripe etc, can now opt for paying in bitcoin, ethereum or such blockchain engineered currency. They are fast becoming an alternative to traditional methods. Sending or receiving money like this has its perk of being easy to implement and more optimal.
In older payment processing systems there a lot of parties involved which include processors, vendors, merchants, and customer. Considering this there is definitely a win-win situation for everyone to resort to a simplified manner.
A recent study by a payment processing company, Monetha, based on Ethereum blockchain, found out that any traditional payment processing system has 16 basic steps from start till end and applies an additional fee that ranges from 2 to 6%.
With no intermediaries involved in a Blockchain backed process and use of single network, according to Lightning Network, an estimated million transactions could take place within a span of 7 seconds.
More Secure Payments
Perhaps, the best advantage of Blockchain, is its inherent quality of keeping thing private and secure. This is easy because blockchain does not expose any PII. Only in 2015, over 100 billion transactions were done with an estimated value of $5.72 trillion dollars. While nearly 31.4 million consumers became a victim of credit card fraud and chargeback.
Alternative currencies such as Bitcoin etc do not require credit card numbers, account details and such. Instead the user only has to authorise transaction from one approved wallet to another one. The only connecting line between the two is a randomly generated string which cannot be used further by anyone.
Because Blockchain can balance speed, and privacy hence it is the go-to choice for merchants for monetary transactions. e-Commerce platforms face huge problems because each day newer techniques are developed by hackers to virtually attack credit and debit information. 31.8 million users faced credit card fraud in 2014.
Brad Nickel of GoByte Pay said “2018 has been a year filled with security breaches and for this reason, security is an area upon which GoByte refuses to cut corners. We utilize 2 Factor Authentication to ensure your data and funds are secure. Our system successfully underwent extensive 3rd party testing, including External Security Assessments, a full code audit and vulnerability tests for their infrastructure, the application and security code. Our infrastructure is hosted across multiple geographic locations, in a state of the art data centre monitored 24/7 by our own security team and that of our data centre partners.”
Improved Order Fulfilment
Blockchain works by creating smaller blocks which have data stored in them and all these blocks are linked to previous one based on the chain of events. In this way this linking translated the payment process from start till end.
Here’s how it works:
A customer places an order and enters information. Doing this will create a block. The customer then proceeds to payment and uses their credit card. Doing this will generate another block and proof of work. This proof of work will verify the payment for the seller. The block will be sent to the seller and they then successfully ship the product. This will create a third and final block showing the completion of the order process. In case of a shipping provider, a fourth block will be generated after the delivery.
Because the blockchain technology cannot be tampered with and has a secure details and disputes process hence it is less likely that any dispute may arise. Only 1-3% eCommerce transactions have resulted in a dispute although the number is expected to reduce further seeing the transparency of the technology.
According to a survey by World Economic Forum, by the year 2025, blockchain will account to 10% of the global GDP. Notable financial and technology institutions around the world are already experimenting and adopting blockchain as a trade platform. Mastercard is an important name in this regards, having developed a blockchain based payment processing system.
Blockchain’s name has been synonymous with Bitcoin and Cryptocurrencies. It is quite understandable owing to the fact that it emerged from there. However, the world is now rapidly moving towards the virtually distributed technology considering its luxury. eCommerce may prove to be the best application of blockchain technology as of yet.