More industries are getting a feel of the disruptive blockchain technology. From leaving an indelible mark in fintech, its coast is fast spreading to the shores of other industries, showing no signs of slowing down soon. The decentralized nature it provides in cryptocurrencies creates a myriad of opportunities that many businesses and sectors can benefit from. E-commerce makes the list effortlessly.
For what it’s worth, the e-commerce industry is still a far cry from reaching its full potential despite being earmarked to hit $4.5 trillion in completed sales by 2021. Considering the fact that most of its downsides are associated with security and payment processing, cryptocurrencies might just be the final missing piece of the jigsaw puzzle. Here are five ways cryptocurrencies will revamp the e-commerce space.
1. Elimination of third party payment processor fees
High charges imposed by third party payment processors pose a barrier not only to customers but to the growth of the industry entirely. According to this report, Payline, a popular payment gateway charges 0.3% per transaction and $10 monthly fee excluding that imposed by credit card providers while Paypal, the most popular payment processor charges about 2.9% + 30cents per transaction.
These exorbitant fees have proven to be detrimental towards the industry’s growth as is evident in the slight decline in estimated e-commerce customers. Cryptocurrencies will introduce a new lease of life to the industry. Since they are backed by no one (decentralized), the need to impose charges based on sustainability or profit-making is non-existent; an introduction that will undoubtedly motivate new and existing customers.
2. No delays, instant fund transfer
Cross-border transactions often expose the flaws of any third-party payment processors. Sadly, this inefficiency has been widely accepted as a norm rather than an anomaly. On average, it takes 3-4 business days to transfer funds to your bank account on Paypal and 5 business days to clear money sent from the bank to PayPal. These delays which elongate item delivery time makes online shopping less desirable for customers.
When stacked up against its crypto equivalent (Ripple’s XRP), its tailbacks become even more apparent. XRP is the most scalable and fastest digital asset with the capacity to handle about 1500 transactions per second, a major improvement on Paypal’s meager 193 transactions per second. Fund transfers using XRP are instant so it is largely expected to facilitate shorter delivery time.
3. Improved Security
Credit card hacks making the headlines are no longer a surprise in our tech-driven world. Every day, hackers seek new loopholes to exploit in these platforms we entrust with our personal data. While they have to ensure topnotch security, there’s only as much as they can do. E-commerce platforms and their affiliated payment processors are centralized networks. This implies that they are susceptible to hacks.
Cryptocurrencies based on decentralized networks provide a more secure means of storing value online since there are no central servers or points of failure. They also eliminate the risks of credit and debit card hacks.
4. Zero downtime
Many payment processors have quite a rich history with downtimes and technical issues. Leading payment processor, Paypal has had their fair share. In 2009, it experienced what was termed a ‘network hardware failure’ which caused operations to cease for about 5 hours. Pingdom gave a breakdown of the cost implication of PayPal’s downtime on the e-commerce giant, eBay.
The adoption of cryptocurrencies will nullify the possibility of such an occurrence. As mentioned earlier, they have no central servers or hardware whose failure could lead to performance-related problems therefore, both merchants and customers are guaranteed 24-hour uptime.
5. Easily accessible
Statistics show that over 2.2 billion internet users have no bank accounts or access to conventional banking services. Modern-day e-commerce platforms, unfortunately, do not consider this demographic as potential customers. Adopting cryptocurrencies will however change that narrative. They are easily accessible and have no requirements to own, unlike bank accounts and debit cards. E-commerce platforms can leverage on this to expand their customer base by adding cryptocurrency payment options.
Merchants, service providers and customers stand a lot to gain from the introduction of cryptocurrencies. The outlined areas are just a few of the endless possibilities. In conclusion, it’s just a matter of time for the adoption of cryptocurrencies to take place, which will revolutionize e-commerce for sure.
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