How blockchain is changing the business of doing eCommerce

The eCommerce industry has long been plagued by online fraud and counterfeiting. Fake companies and sellers trade in non-existent or damaged products, deceive consumers by creating multiple profiles and posting false reviews. Or, worse yet, they may intercept customers’ card details and reuse them to buy products.

In fact, online payment fraud is set to not only keep pace with eCommerce growth, but to actually outpace it. In 2016, for every $100 spent through eCommerce, fraudsters stole 5.65 cents. And, the cost associated with reducing fraud by implementing payment gateways, is around 2.9% of the transaction size. Combined, the cost of fraud and the technology to prevent it, is gravely eating into business’s profitability.

But, this is not the only challenge online businesses need to tackle. Transparency of data within the supply chain with regards to the quality, origin and fees levied on a product is turning into opacity. Businesses are finding it harder to clarify details around how suppliers are sourcing product or whether they are charging a hidden and undisclosed payment fee for services.

Ultimately, these challenges have resulted in a breakdown of trust. Customers are uncertain whether they will receive the product they actually paid for and if it will match the product as described by the vendor. They worry about whether their credit card and personal data is secure. Businesses are not confident of supply chain data and are anxious about the future admin and product replacement costs to the business that relate to fraud. These costs occur through the replacement of lost or damaged product, and the increased use of resource within the Customer Services, Supplier Management and Returns Handling teams when a suppliers’ products or online payments are falsified.

Many technologies exist already to mitigate a certain degree of distrust, but blockchain will be able to secure the transaction lifecycle once and for all. is often associated with being the foundation on which cryptocurrencies such a Bitcoin have been created. A blockchain, is a continuously growing list of records, called blocks, which are linked and secured using cryptography. And because of the way in which security is inherently baked into its DNA, it is immutable. Analysts and consultants such as McKinsey believe that this is going to truly disrupt the way in which payments – whether the movement, storage, trading or accounts of money – take place online. And, according to the same report from McKinsey, while payments is only one area in which blockchain can be applied, it is one of the most ripe for transformation.

At the heart of blockchain is an encryption methodology which protects consumer credit card data against transaction fraud. It also provides a single version of the truth, as each transaction is written to the blockchain, so as to provide transparency within supply chain payments, ownership of the asset, origin and source of the product. If you were to draw an analogy with the bank, it would be as if each block within the blockchain acts as an individual, trusted and totally transparent bank statement. This means that ultimately, eCommerce companies draw closer to the consumer, by removing the distrust, transparency and payments technology barrier. Instead, they meet each other under a smart contract.

However, adopting blockchain is not without its complications. As a relatively new technology, with few industry best practices, the strategy for implementing and integrating blockchain as a standalone ecommerce platform, or within existing technology can be tough without the right knowledge and expertise. Fortunately, smart platforms can help eCommerce companies connect their sites and integrate quickly and easily. There are also specific signs to watch out for when looking to integrate a blockchain payments solution:


  • Tamper Proof Transparency: This module ensures that no blockchain participant can tamper with a transaction after it has been recorded to the ledger.This data will be freely available and transparently reported according to different user type permissionsThis immutability gives both sellers and buyers much greater confidence of the channel. In Blockchain parlance, all, or a predetermined majority of, participants must agree on a transaction’s validity before, for example enabling individuals to rate the quality of service/product.


  • Single Identity Feature: This ensures that each online identity has valid and approved profile information associated with it to ensure individuals are who they say they are.


  • Alternative cryptocurrency-based payment mechanism: This not only eliminates gateway provider fees but ensures payment card details are not exposed and taken to be used as a source of fraud.

To future-proof trust, security and transparency for payments and products businesses need to make sure that blockchain can be applied to both existing and evolving use case scenarios. To do this, businesses need an open, smart platform that also ecosystem to enable others to build on existing knowledge, develop and share their own applications. If they do so, the agility, cost and innovation benefits are limitless.

If online businesses are able to adopt blockchain swiftly, and partake in an ecosystem where those they can share, create and collaborate to build solutions that fit unique needs, they will be able to safeguard profitability, and, ultimately, trust in their brand.

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