The Power of Blockchain for Ecommerce

Jared Ronski

Co-founder at MerchAct

Views 139

The Power of Blockchain for Ecommerce

10.01.2019 07:30 am

The ecommerce payments landscape is evolving as mobile and alternative payment methods rise in popularity. Worldwide mobile payment revenue is expected to exceed $1 trillion in 2019 and more than 2.1B consumers are expected to use mobile payments by this year. The dynamic changes happening in the payments space also raise questions about speed, convenience and security.

Blockchain has also emerged as a preferred tool for digital transformation across numerous sectors. Its applications in payments are particularly interesting. While merchants are still leery about accepting bitcoin as payment, blockchain ledger technology (BLT) is opening the door to new payment opportunities.

The Blockchain Disruption in Ecommerce

Traditional ecommerce relies upon costly intermediaries and systems that are slow and prone to error. Blockchain, on the other hand, offers a decentralized option set to empower consumers with more transparent and secure transactions.

Even as alternative payments and payment security technologies flood and disrupt the marketplace, blockchain offers unique benefits that fintechs cannot ignore.


Traditional payment processing fees are costly, typically ranging from flat rates to a percentage of the total transaction to some combination of both. By leveraging blockchain marketplaces, some of the costs imposed by intermediaries could be eliminated. Blockchain’s inherent transparency could allow for an ecommerce platform that incentivizes good/honest behavior by rewarding consumers with a trust score (much like a credit score, but based on the number of “good” transactions completed). Those with higher trust scores would enjoy lower fees, which would ultimately lower abandonment rates.

In looking at the current cost structure of processing transactions, sellers pay fees along with the costs of each system in their ecommerce stack. Blockchain technology would enable sellers to aggregate various processes and systems in one place: payment processing, inventory databases, product management, and other operational systems. That alone could wipe out significant IT costs associated with maintaining and upgrading each separate system.


Emerging payment methods mean additional vulnerabilities. Securing payments and sensitive customer data has become a complicated web of compliance, individual fraud prevention tools, and a variety of protocol. Entangled in that web are consumers who are leery of having their financial data exposed in a breach. Breaches take a toll on the entire payment ecosystem. For merchants, damages can range from hundreds of thousands of dollars to millions, not to mention the unspoken cost of lost consumer trust and damage to a brand’s reputation.  

Blockchain presents an opportunity to securely manage ecommerce databases in a simplified way. Distributed ledger technology decentralizes administration and records of transactions, eliminating the single failure point that is present in other databases.


Given the number of intermediaries that exist in current ecommerce, it’s easy to see how speed suffers. Transactions are routed through digital storefronts, payment gateways, issuing banks, and a variety of other touchpoints, each managing the data transmission in its own way. A stall at any touchpoint slows the entire cycle.

Blockchain enables direct management of these processes by removing intermediaries and third-parties that typically slow the process. This reduction in inefficiencies can rid the process of unnecessary delays and friction.


Blockchain’s full benefits are yet to be seen, though forward-thinking fintechs, banks, and merchants are beginning to tap the technology to improve the speed, convenience, and security of payments. As more entities and consumers adopt and adapt blockchain, the ecommerce space will continue to evolve. Blockchain has the power to move ecommerce towards faster, less expensive, and more secure payments.

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