A blockchain is a peer-to-peer network of computers. Blockchain technology offers easy, secured, and faster options for international payments. It is used in various industries such as retail, insurance, automotive, health care, and advertising.
The e-commerce industry is flowing, but payments remain a crucial factor to improve user experience. There are 24 million e-commerce sites worldwide. The total online sales from e-commerce reached $3.9 trillion at the end of 2020. However, what’s interesting to note is that around 155 million e-commerce transactions end in a dispute.
Blockchain is set to play a vital role in optimizing the payment structure to reduce the number of disputes and improve the user experience. In this article, we will discuss the various ways blockchain is revolutionizing e-commerce payments.
1. Faster Payment Processing
According to the World Economic Forum, around 10% of the world’s GDP will be stored using blockchain by 2027. For companies dealing in international payments, blockchain can offer high-speed payment transfers with lower conversion fees. Besides, the blockchain ledger provides a single, clean record of payments.
Blockchain helps banking systems offer a decentralized network where no one trusts anyone else. Besides, the data entered is irreversible, and all the different blocks of data are chained together in chronological order.
Distributed ledgers can fasten real-time transactions and reduce overall operations costs. Securities such as stocks and bonds can be managed more efficiently by placing them on public blockchains. Customer information can be stored on decentralized blocks, thereby initiating faster approval of loans for e-commerce businesses.
2. Easy Handling of Receipts and Warranties
Handling receipts and warrants is another major issue for e-commerce retailers. Blockchain helps to solve this problem quickly. It is always a hassle for customers to prove the warranty of the products they have purchased since the chances of losing paper receipts are high.
When the warranty information is stored in blockchain ledgers, then the problem of losing receipts is solved. Besides, warranty details, customer details, product purchase data, retailer information, and every other essential detail are stored and secured in a digital ledger. Therefore, not just faster payments but warranty-related issues are promptly solved by blockchain.
3. Smart Contracts That Executes Themselves
Smart contracts are programs that autorun based on certain conditions. One of the hassles of e-commerce stores is to release payments to vendors. Blockchain solves this issue of issuing payments via smart contracts.
For instance, if you release payments to vendors once they reach a sale of $1000. You can create a smart contract on blockchain and feed the vendor details as a beneficiary. When the sales touch $1000, the money is automatically transferred to the vendor’s account. The blockchain automatically updates once the transaction is completed.
4. Lower Processing Fees
Ecommerce merchants can reduce transaction fees by up to 70% by using blockchain or crypto payments. For instance, traditional payment gateway providers like PayPal, Square, and Stripe charge more than 2.5% per transaction.
However, crypto payment providers such as CoinBase charge as low as 0.5% for every transaction. Hence, not just faster payments but lower processing fees is another most significant advantage of blockchain technology.
5. Staying Safe From Cyber Attacks
E-commerce websites have to follow security best practices as they have to deal with cyber-attacks because hackers are always looking for ways to sneak into customer data. Some of the common cyber attacks that e-commerce sites face are malware, phishing, known vulnerabilities, and human errors. Any data breach might leak customer card details and damage your business reputation. Customers trust you as an e-commerce merchant, and any data hack might ruin years of trust in seconds.
Blockchain technology is a highly secure network of distributed ledgers that keeps the e-commerce database management system safe. Blockchain forms a decentralized form of data storage, and the information is encrypted. Hackers can’t penetrate such data storage systems.
Blockchain technologies have made it easier for third-world countries to do business online. Blockchain offers a decentralized ledger consisting of blocks with its crypto hash that serves as a unique id. The mode of payments in the blockchain is highly secured, allowing safe and faster cross-border payments. Ecommerce businesses should start leveraging the power of blockchain to reduce the number of intermediaries in the payment process and automate payment flows.