Blockchain and cryptocurrencies have much to offer the world of conventional e-commerce, with the first payment plug-ins and even whole marketplace platforms now launching.
From its shaky start with Amazon and other early online retailers in the late 1990s, e-commerce quickly established itself as the web came of age and is now a large and still fast-growing sector. A handful of giants such as Amazon, eBay and Alibaba dominate the market, along with PayPal, which was acquired by eBay in 2002 and acts as its default payment processor.
Despite its evident popularity and market penetration, e-commerce has drawbacks. Most of these relate to the centralisation of marketplace platforms and the size of the corporations behind them.
Sellers are typically required to pay high commission fees, but have little choice if they want to access the large audience that the top e-commerce platforms enjoy. Fees can run to 20% in some cases. There are also credit card or payment processor fees to factor in. PayPal, for example, typically charges around 3%. All of these have to be included in the price and passed on to the consumer.
With conventional e-commerce, the platform and company behind it act as gatekeepers who limit contact between buyer and seller. Merchants struggle to build a long-term relationship with customers, since the marketplace company does not want them trading outside of its e-commerce platform. Communication is often restricted, or takes place within strict parameters, and the platform is able to view any messages exchanged between buyer and seller.
Every large online service harvests extensive personal data from its users and monetises it in various ways, from tailored advertising through to selling it or sharing it with third parties. Additionally, data breaches are an all-too-common occurrence. Personal data has been called the oil of the internet, and its value makes it a popular target for hackers. Although GDPR has somewhat improved matters, in many jurisdictions the laws around data use are far less clear. There may be no straightforward procedure for how companies should act in the case of a data breach, and they may not tell their customers that their personal information has been compromised for months, if at all. In short, data loss has gone from being an embarrassment or inconvenience for a company to little more than the price of doing business.
Blockchain and cryptocurrencies offer a number of solutions to these problems. Although bitcoin first rose to prominence as a tool of (illegal) e-commerce on the net’s dark markets, there are powerful reasons to integrate it in mainstream marketplace platforms.
The first fully decentralised marketplaces are now coming online. These aim to replace the entire infrastructure of eBay, Amazon and others with a blockchain-based solution, using smart contracts to recreate the backend and inventory database. For example, BitBoost is pioneering one such marketplace on the Ethereum network. One of the advantages of this approach is that it enables a completely different business model, which does not charge commission fees — it is a peer-to-peer approach that does not involve a company or require any gatekeepers.
For individual merchants with their own website-based stores, there are still enormous benefits to integrating cryptocurrency payments as an alternative or complement to traditional payment methods such as PayPal or credit cards.
Crypto payments are truly borderless, so it makes no difference whether you are buying from someone a few miles away in the next village or on the other side of the world. That immediately takes one set of fees off the table. (Banks will typically levy both an additional fee for foreign payments, and offer an exchange rate that is far from the market spot price — an extra stealth charge.)
For sellers, crypto payments offer a near-instant means of receiving value: there is no three-day delay entailed, as there is when waiting for credit card payments to clear. Fees are very low, so no great cost is passed on to the consumer. Although bitcoin fees spiked late in 2017 and approached $20, SegWit and transaction batching have seen them drop to their lowest levels in years. Other cryptocurrencies, which have deliberately positioned themselves as platforms for everyday transactions, have far lower fees still — Waves charges just 0.001 WAVES or less than half a cent per tx.
As a high-throughput, low-cost and user-friendly blockchain platform, Waves is the ideal choice for e-commerce integration. The platform has a robust, fast network and powerful token management facilities, enabling merchants to receive crypto tokens as payment and even create their own currency, should they wish.
Waves has recently released a Payments API, which enables easy integration of WAVES and Waves token payments into any website. Additionally, Mageworx has partnered with Waves to enable crypto payments via the popular Magento website plugin.
Merchants also enjoy the benefits of crypto’s irreversible transactions, which put an end to fraudulent chargebacks. There is no payment processor to reverse transactions unilaterally, as often happens when a customer dishonestly claims they never received an item. E-commerce companies’ support teams frequently side with the customer as a matter of policy, at the seller’s expense.
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