This article is adapted from the original article here
E-commerce is a hot market. It has shown a huge growth over past few years and in coming years we can expect some major changes in the industry with the introduction of crypto currencies.
Current Ecommerce system suffers from a set of pain points, we’ll discuss those later. However, the pain points are not here to stay, thanks to the blockchain technology and crypto currencies. Crypto transations provides us a solution to heal the pain points experience in the ecommerce sector.
Let’s take a look at the various challenges faced by them and how cryptocurrency will help to resolve these challenges.
Processing fees for transactions
Credit and debit card vendors charge for the service they provide during every transaction. These transaction charges almost range between 1.5% and 3.5% for each service. The credit and debit card vendors have to pay for the mediators whereas in this case, to the credit card processing company. In order to compensate the amount the credit card vendors pay for the company, they ask for extra money from customers for their service. These extra charges are got from customers as transaction and processing fees, which are very high.
Chargebacks and frauds
Chargebacks are dealings in which the shopper argues for payback from credit card issuer, bank or digital payment providers in case of unsatisfactory dealings. In 2016, the estimated chargeback revenue loss was $6.7 billion with 71% of that loss caused by “friendly/chargeback fraud”. For approving chargebacks every payment method provider follows a set of rules. These chargebacks can also be used as a tool for 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 continuous rise in fraud and financial account takeover in the current payment system, banks, merchants, and customers are eyeing at cryptocurrency, and its extremely secure underlying blockchain technology, as a possible resolution.
How crypto can solve these challenges?
When a buyer and seller agree upon doing the purchase process over crypto coins, the problems seen in the conventional methods can be solved. For example, the absence of middleman as seen in the conventional method, there is no need to pay high digits as ‘processing, transaction or convenience fee’. 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.
Reward assurance for the seller as well as the consumers
Rewards can be a positive move for increasing the business. By using the crypto token, the merchants are given rewards as a commission rebate. Along with the valuable service offering of spending cryptocurrency on services, the customers get the reward for several reasons. The customer will receive incentives when shopping using the crypto token and that are added automatically to their wallet.
Cryptocurrency payment option gives the ecommerce owners ultimate ownership of their money. High transactions charges as seen in the traditional systems and risks of falling into chargebacks and fraud are avoided. 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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