How Blockchain Will Disrupt Ecommerce Payments

Blockchain entered the mainstream world with a bang. As the technology gains momentum and exposure, new advancements in ecommerce payments are becoming a reality. Read more about some of these applications.

If you were alive in 2017, it’s almost impossible you haven’t heard of Bitcoin, Blockchain, or cryptocurrency. We watched Bitcoin take the stock market for a ride and started to hear more about the different applications of Blockchain to different industries.

As this technologies has crept into the mainstream, it’s hard to ignore the noise it has been making in the ecommerce payments world. Many are wondering if cryptocurrency as a main form of payment holds water and whether the underlying Blockchain technology may have even more applications that can streamline and secure the way people pay.

Before diving into these applications, we’ll look at what Blockchain is to better understand why its relation to ecommerce payments could potentially be disruptive.

What is Blockchain?

In understanding how Blockchain has the potential to disrupt the ecommerce payments industry, it’s imperative to first understand what Blockchain is. In a few words, it is a distributed ledger.

Transactions occur on a particular Blockchain, and are then recorded as block data on the ledger. The “Blockchain”, then, is a long chain of data blocks, each available for verification at all times. It is essentially a complete history of transactions, the data around which is protected by cryptography that can only be unwrapped by a key holder. Unless one has the key, the security is impenetrable.

As a distributed ledger, it exists on a network comprised of nodes. Each node contains an exact copy of the ledger, which the entire network checks in perpetuity. In that way, the nodes role is that of an administrator, making the Blockchain network decentralized. If at anytime, a node reflects a ledger that is different from the other nodes within the network, a notification is queued alerting the network to the divergent node. The node can then be booted from the network.

These nodes are really electronic devices that use a client to connect to the Blockchain. The client can then validate transactions. As new nodes connect to the network, a copy of the entire network’s Blockchain is downloaded to it.

What Does Blockchain Have to do with Ecommerce Payments?

The ecommerce payments landscape is constantly unfolding. Just as new and alternative payments technology is introduced into the space, new challenges seem to flood in with equal vigor.

Fraud has long been a problem for ecommerce payments. The card-not-present (CNP) nature of payments made in the online channel presents numerous opportunities to nefarious characters to steal sensitive card data. While there are a myriad of tools available to help merchants, fintechs, and financial institutions fight online fraud, none of them are perfect.

Additionally, while ecommerce payments has opened up a world of convenience to consumers in retail and banking, there are still areas for improvement. Ecommerce payments consists of a long and often laborious supply chain that touches multiple parties throughout the process. Between shipping, commissions, tendering, delivery, and chargebacks, there are lags in the transaction process that can result in costly delays.

This leads into the challenge of intermediaries and their roles and impacts in and on ecommerce payments. There are currently a number of third parties that maintain ledgers on behalf of either the buyer or the seller, but they do so for a fee. Similarly, ecommerce payment processing offers numerous methods for transacting, but intermediaries in the payments process complete these transactions for a fee. This gets even more complicated as we look at how these processes occur at an international level.

What are the Applications for Blockchain in Ecommerce Payments?

Decentralization Means More Access and Reduced Costs
The Blockchain can potentially – and substantially – reduce the time and cost burdens associated with ecommerce payments, no matter where they occur.

One example is a company that aims to create a decentralized platform for transactions that is both currency- and country-agnostic. Given the inherent security of the Blockchain, it can facilitate transactions efficiently using cryptocurrencies without sacrificing high security standards. As a decentralized platform, transactions can be faster, easier, less expensive and more automated.

The difference between transacting using Blockchain technology and using, say, PayPal, is that fees can be substantially lower with the former. Other reasons cryptocurrencies may fare better long-term than other digital payments include the ability to process instantaneous transactions (sans fees), global access via country/currency-agnostic currency, disintermediation leading to lower/no fees, and enhanced security.

Smart Contracts for Streamlined Supply Chain
One technology company is already embarking on this transformative journey by developing platforms for smart contracts, enabling two or more parties to transfer payments, transfer documents, sell products, or commodity consumption. By using Blockchain technology, these smart contracts can create and automatically execute digital agreements between two parties.

This technology is applicable to mobile app services as well as operating solutions in what will be a disruption to ecommerce-as-usual for companies in these industries. The company also intends to go one step further, by enabling simple, automated means for lending, international payment transfers, invoice payments, and more.

The high security standards inherent in Blockchain technology make this a positive use of the technology, streamlining user experience and reducing costs associated with executing transactions.


We are just beginning to see the potential for Blockchain to disrupt ecommerce payments. As Blockchain and cryptocurrency continue to garner mainstream attention from merchants, consumers, and fintech alike, we will continue to see new applications and solutions roll out into the ecommerce payments space. The benefits of inherent increase security and greater accessibility are undeniable. Only time will tell how Blockchain stands to disrupt ecommerce payments on a grand scale.

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