29 June 2022
Before we start looking at the options for blockchain payment solutions, let’s talk about how they are different from a conventional payment method like a credit card. In many cases, they can be more secure than a card payment reducing the risk of fraud. There is no central authority like Visa that needs to confirm that the transaction is accepted, with blockchain the transaction is a peer-to-peer, meaning that the buyer and seller are transacting directly with each other with no intermediary. For this reason, it is possible to carry out a transaction anonymously, however, if identity verification is required it is possible to automate that at the same time. Crypto exchanges are required to carry out KYC (know your customer) on their customers so if you need to verify the identity of a buyer as part of a transaction then this makes it possible to identify them automatically. This all makes cross boarder and automated payments much safer for the merchant. There are also many other benefits that we will look at in more detail.
If you don’t need to know anything about your customer it is possible to take payments completely anonymously, for example, if you want to automate micropayments for the use of a product or service that is possible as well. This can be done in such a way that a vast number of payments can be processed anonymously.
If your business needs to identify your customer as part of any order processing operation, for example, if you are an insurance business that wishes to allow customers to buy insurance online with no human intervention. Then processing payment in cryptocurrency and verifying the customer’s identity automatically using a smart contract could be the way to go.
As we have seen in recent years, the future of business is cutting out all the middlemen, in the case of payments this could be banks, card providers, credit and identity checkers and, as business owners, our own internal staff that previously had to deal with every transaction manually. Peer-to-peer is literally payment from your customer’s wallet to yours, noting in between. This reduces processing fees, time, fraud risk, and errors.
Removing risk from cross-border payments is one important reason for implementing blockchain payment solutions. It is all too common these days to get a claw back from a credit card processing company because a card you accepted weeks ago turned out to have been used by someone other than the owner. The owner of the card has just got their statement and complained of unknown transactions that are immediately clawed back from the merchant. Conversely, with a blockchain payment solution, it is up to the customer to protect the security of their wallet because payments cannot be undone. This of course does not prevent cybercrime; it just places the responsibility firmly with the customer. Wallets can be extremely secure if used properly so it is up to the wallet holder to take the necessary precautions. Most importantly for large transactions, the merchant is no longer at risk of claw backs.
Blockchain payment solutions can be applied in a wide range of industries but would be particularly suitable for industries that are looking to automate payments and processes as part of the sales process. However manual and automated orders are perfectly possible with NextHash’s own payment solution.
It may be that you find that you can take payments as part of your product usage that had not been possible before. Micropayments can be a great way to allow a customer to focus on your product and almost ignore the payment system once it is set up. It may also allow you to expand your sales into other markets that were too complicated to reach with conventional payment methods due to cross-border transactions. It could also hugely reduce the cost to you for delivering each product because of reduced order processing costs. And by making the sales process smoother and easier for the customer they are much more likely to go ahead with the order.
There are a few considerations when integrating blockchain payment solutions into your business. However, NextHash will identify each of these as part of the consultation process with us.
Will you use an existing blockchain or token, or will you create your own, which gateways and services will you use? NextHash provides our own payment solution that we can use to reduce the amount of development work required to complete your solution.
It is necessary to ensure that any blockchain payment solutions that are implemented comply with local government regulations. It may be possible to resolve any issues with this by using alternative solutions.
You will need to consider how the solution interacts with existing systems in your business and will it need to operate alongside legacy payment solutions.
The main benefits of blockchain payments systems include.
• Remove intermediaries which will reduce cost and speed up transaction time.
• Real-time payment clearing, providing you with the assurance that transactions can’t be reversed.
• Secure cross-border payments
• Secure data records that are open and indisputable
• Reduced operations costs
• Automate transactions with smart contracts
• Automated micro payments become viable
• Auto KYC or anonymous payment options
• Trustless transactions remove the need for time-consuming due diligence
If you are considering implementing blockchain payment solutions into your business, contact NextHash for a free consultation. This initial discussion will be a high-level discussion to ascertain your requirements and current systems. As we move through the process, we will need to look much deeper into your existing systems and processes before designing and implementing the full solution.
Contact our solutions architects today for more information about how we can help.