The worldwide e-commerce retail sales surpassed $2.2 trillion in 2017 and it is estimated to reach up to $4.5 trillion by 2021. Online businesses contained roughly 10% of the average worldwide retail deals in 2017 and over the next 3 years, it will increase by another 5.4%. Amazon and Alibaba are right now the world’s biggest online retailers. The direct traffic of Amazon is 2 billion every month and Alibaba’s 216 million. According to 2017 PwC report, 56% of 24,000 global shoppers choose Amazon.com as their online retailer. Even though global e-commerce includes both desktop and mobile shoppers, mobile is rapidly becoming a predominant strategy for online purchases.
E-commerce is growing massively on a big scale. However, the retailers face some challenges within the e-commerce by following the traditional system for payment. let’s explore the various challenges they face and see how cryptocurrency will fill this gap to resolve these challenges
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Credit or debit card vendors levy charges for every single transaction. Normally the payment system charge ranges between 1.5% and 3.5% for every exchange. The payment system vendors charge for every event in the transaction flow including usage of payment gateway and credit card processor, credit card issuer, issuing bank etc. Considering these factors, the merchant has two options: pass this cost onto their customer or bear the loss. With the increasing interest for faster, more efficient and exceptionally secure installment methods, keeping pace with mechanical developments and their requisite costs is placing a burden on small and medium estimated organizations(SMB’s). This further exaggerated the risk of consumer chargebacks and the likelihood of fraud stemming from both consumers and would-be hackers.
In 2016, the estimated chargeback revenue loss was $6.7 billion with 71% of that loss caused by “friendly/chargeback fraud”. Chargebacks occur when a shopper launches a dealing dispute through either their credit card issuer, bank or digital payment provider. Each payment method provider contains a specific set of rules for approving a chargeback. This helps to scale back fraud in the merchant’s end of the dealing. Chargebacks may also be used as a tool for creating dishonest purchases. In this situation, the retailers are left to pay the price for the merchandise and/ or service provided by payment processors, banks, and card issuer as transaction fees.
With the continuous rise in data breaches, which lead to fraud and financial account takeover it is clear that the current payment system has enormous imperfections that cost merchants and customers a lot of time and money. As a result of this, banks, merchants, and customers are eyeing at cryptocurrency, and its extremely secure underlying blockchain technology, as a possible resolution.
The cryptocurrency phenomenon has provided the world with the startling use case for blockchain. The total market cap of presently active cryptocurrencies has exceeded the GDP of over 100 countries. While governments still grapple with various aspects of cryptocurrency market ie, exchanges and ICO’s, different industries like banks and financial services are moving forward with the full focus on streamlining the inter and intrabank transactions. Despite cryptocurrency’s good quality with investors and speculators, there are several challenges faced to gain a wider realm of acceptance for cryptocurrencies as a way of payment for product and services. Customers are willing to experience different modes of payment services which can provide with a secure, reliable system with low transaction fees, reward incentives, and a consistent valuation of the currency being used.
When a buyer and seller agree upon doing the purchase process over crypto coins, many of the challenges faced can be solved. For example, the absence of a middleman, in conventional methods – payment gateways and card issuers etc act as middlemen in a purchase process. They’ll grab money out of pockets of the seller as well as the buyer by giving fancy names like ‘convenience fee’ or something like that. However, one of the key attraction of blockchain technology is that it can rule out middleman from transactions. Using a crypto coin for e-tailing can benefit both buyer and seller by reducing the transaction costs, reducing the price of products and services. Moreover, the transactions can be instant and product delivery can be managed using smartcontracts. Here, the product is dispatched via autonomous or semi-autonomous systems upon the reception of the crypto coins from the buyer. Completion of coin transfer can evoke the smartcontract to initiate the product dispatch and reducing the chances for frauds and chargebacks.
The solution allows shoppers to buy products and services from merchandisers making an economical cryptocurrency payment scheme that rewards the buyer as well as the merchant. Such a sustainable cryptocurrency payment system can consistently add value for merchants and shoppers thus preventing the payment system issues as seen in traditional merchant consumer payment transaction protocol.
Rewards can be a driving factor for increasing the business. Using crypto tokens, the reward allocations and distribution can be done more efficiently. Merchants are rewarded a commission rebate for their total cryptocurrency volume trade by producers or vendors. Merchant controlled settings allow either keeping the cryptocurrency they’ve received as payment or instantly exchange it for fiat currency settlement that is delivered to their bank account. Along with the valuable service offering of being able to spend cryptocurrency on services, the consumers get the reward for several reasons. In cryptocurrency payment option they include surtax that covers the merchant’s exchange fee. However, when paying with crypto token the surtax is ignored. When a consumer spends tokens in a merchant, the consumer will receive a reward that automatically goes into their wallet.
Cryptocurrency payment option gives you ultimate ownership of your own money. It avoids the high transactions charges as seen in the traditional systems and can avoid the risks of falling into chargebacks and fraud. Moreover, e-tailers and customers will have the benefit of getting incentives that in turn will attract more customers and growth for the organization.
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