Crypto & eCommerce: Can Cryptocurrency Payments Reduce Chargebacks & More?

June 8, 2021

In 2021, it seems that crypto is almost everywhere you look.

Finance? Well, yea, of course, but sports? There is crypto. Art? Crypto is there too. Travel, solar energy, and elections? Crypto, crypto, crypto.

Cryptocurrency is also playing an increasingly large role in the world of eCommerce merchants. Crypto is not new to e-commerce, certainly; however, now that more investors than ever have crypto to spend, cryptocurrencies are becoming an increasingly large part of the eCommerce economy.

It is not only about having cash to flash, either. There are a number of potential benefits for merchants who are interested in receiving crypto-based payments. For example, the implementation of blockchain technology can help to reduce fraud. Crypto payments can also decrease the likelihood of credit card declines, chargebacks, and cart abandonment.

Recently, Finance Magnates sat down with Peter Jensen, the Chief Executive of RocketFuel Blockchain Inc. Rocketfuel describes itself as “a global payments processing company offering highly efficient 1-click check-out solutions using Bitcoin, other cryptocurrencies and Bank transfers to eCommerce merchants and their customers.”

We spoke about the benefits of using crypto payments in 2021, changes in crypto markets, and the future of cryptocurrencies.

This is an excerpt of an interview that was recorded on May 12, 2021. To hear more about the intersection of cryptocurrency and eCommerce, listen to Finance Magnates’ full interview with Peter Jensen on Soundcloud or Youtube.

Fraud, Card Declines, and Cart Abandonment Are Major Problems for E-commerce Merchants

Why do e-commerce merchants need crypto payments?

“Basically, our merchants do business with us for several reasons,” Peter said. First, “They have a lot of problems with their current payments, in certain verticals, merchants can have very high rates of declines, high rates of chargebacks. Not everyone gets their money immediately, and then there are all the issues with fraud.”

“So, for example, fraud can cause ‘cart abandonment’: if someone is on a website, then you may have invested a lot of money into attracting that consumer to that website” through ads and other means. Cart abandonment is when the consumer is about to make a purchase, and has put items into their digital shopping cart, but decides against it at the last minute.

“The stats say that about 19 percent of all cart abandonment happens because people don’t trust the vendor that they come to.”

Traditional Electronic Payment Methods Charge High Fees to Merchants

“So, if you take all of that: declines, chargebacks, cart abandonment, and fraud, that’s one reason. There are a lot of reasons why that is, but fundamentally, it’s a flawed architecture that’s over 40 years old based on physical credit cards that we’ve bolted chips and CVC codes onto.”

“That’s one reason that eCommerce merchants need crypto payments. You can imagine that if you are a merchant, and you have 20 per cent declines, decreasing the number of declines and chargebacks will increase revenue.”

Another reason that eCommerce merchants need crypto payments is that “depending on what vertical they are in, merchants pay between 3-8% in payment fees. The reason that it’s so high is because of all the fraud that’s happening, someone’s gotta pay for that.”

“If you can replace the intermediary by moving the transaction to blockchain technology that can guarantee that the transaction goes from A to B, you can remove all the fraud, as a result, we can offer payments at a much lower rate.”

Crypto Investors Have Money to Spend

The third reason that eCommerce merchants need crypto payments has to do with accessing new segments of consumers that have money to spend.

“If you think about it, a lot of people over the last three to five years have been buying various cryptocurrencies that have gone up in value. Therefore, you have a group of people that may have invested $1,000 that is now worth $10,000, and most of them do not want to exchange that money back into fiat currencies. They’re looking for ways to spend that.”

“Therefore, merchants are saying, ‘huh, if someone comes to my website with $10,000 to spend in their crypto account, why not offer them the opportunity?’”

Indeed, even with the market crash that took place in mid-May, crypto hodlers that have been in the game for several years are still in the green, and savvy merchants are aiming to take advantage of the opportunity.

As a result, Peter said that Rocketfuel Blockchain has seen an increase in the number of eCommerce merchants seeking to implement crypto payments: “there’s a lot of interest right now. People realize that crypto is more than just a store of value: it’s actually something that can be used as a means of transaction, and there are many benefits to it.”

“It’s like the internet 25 years ago, in the beginning, people didn’t understand it. But now, they’re starting to understand: eCommerce merchants hear from their friends that they’ve moved 20% of their payment volume to crypto, and I’m saving some money and getting access to new customers and reducing many problems.”

Mass Adoption Won’t Happen without Ease-of-Use

As cryptocurrency payments are becoming more popular, tech entrepreneurs are also catching on: there has been an uptick in the number of crypto payment providers on the market. We asked Peter how Rocketfuel Blockchain is unique among them.

“There are always the ‘first movers’ in any kind of technology,” he said. “Those are usually the geeks.”

“Those are the ones that pay with a QR code,” he continued. “If I asked my mom to pay with a QR code using Bitcoin, she wouldn’t do it,” the process would be too complicated.

“It needs to be super easy to pay. The way we differentiate is that we have designed a checkout process that is just like Amazon’s one-click solution. The difference is that instead of just being able to click with Visa or Mastercard, you can also say that you would like to pay via bank transfer or with cryptocurrency.”

“It needs to be that easy for mass adoption,” he said.

Another of Rocketfuel’s differentiating factors is that “we are crypto- and exchange-agnostic…We don’t care if you have your money in a physical wallet on your phone, or in Coinbase, or whatever, wherever you have your money or your cryptocurrencies, we will take it from you and give it to the merchant.”

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