Credit cards entered the scene in 1950, and since then, business transactions have never been the same. Now credit cards are more than short term loans, or credits, to an account–they are a way for people to earn rewards and fund incredible vacations that would otherwise escape their grasp. The widespread use of credit cards has its share of advantages and disadvantages–but after reviewing the situation, it looks like things need to change.
Credit cards, in many ways, have been extremely beneficial for businesses. Customers can pay for things they can’t afford in the current month by swiping their card and pushing the expense to next month’s balance. The bank tied to the card pays the business for the purchase, and then the customer pays off the new debt with the credit card company. Businesses receive payment quickly and consumers are more prone to spend with a card in hand.
What could go wrong? Unfortunately, a lot. Credit card fraud is on the rise, and it is increasingly dangerous to consumers and businesses alike. Consumers’ credit scores can be destroyed with one swipe, and businesses can also receive the fallout from falsified purchases.
Even apart from security issues, credit cards and other traditional payment methods suffer other disadvantages. Banks and credit card companies levy fees for transfers and credit card transactions, resulting in increased expenses for businesses which often make their way to customers’ wallets in the form of higher prices. Additionally, bank account payments are fast–but sometimes fast is not enough. It can take several days for a transfer to settle, occasionally longer, and in this global economy, that just won’t cut it.
This raises a simple question, “Is there a way to increase payment security and payment speed at the same time?” Blockchain platforms, which run decentralized ledgers that store a history of all transactions that take place, have the answer.
These game-changing platforms offer businesses a way to quickly process payments while guaranteeing the security of the payments–something that both consumers and merchants benefit from. These platforms deal particularly with cryptocurrency based transactions, which have grown 62% per year since 2014.
The Growth of Blockchain Technology and the Need for Mainstream Integration
Some firms estimate that annual revenue for enterprise applications of blockchain will grow to almost $20 billion by 2025. This is an annual rate of about 26%. Others point out how the number of blockchain users has gone from approximately 4.6 million to 17.7 million in the past two years alone. Clearly there is a need for businesses to adapt to the widening use of crypto coins.
Unfortunately, many businesses aren’t ready to make the leap and begin transacting business with cryptocoins. A large part of this is a lack of education. Blockchain technology can be complex and confusing, and an unknown, unestablished regulatory environment makes the horizon unclear.
Enter blockchain based platforms that integrate a business’ payment structure to facilitate blockchain transactions. Companies like the recent startup Jincor provide consulting and legal help to businesses that use their platforms, similar to what traditional banks do. They also take their clients through strict verification processes, connecting their blockchain or digital ID to a mainstream entity. The result is that all transactions between parties on the platform meet regulatory and corporate policies.
Jincor and companies like them, are utilizing the particularly helpful aspects of blockchain technology in the general business world, mixing the new and emerging technology with a platform that is useful for legacy business structures. The result is a useable and secure payment platform that is free from the risks that legacy systems provide.
The Nuts and Bolts of Blockchain Payment Platforms and Why They’re Necessary
What will happen if businesses make the jump to blockchain based payment platforms? First, they will experience a much higher payment rate. The blockchain platform runs on smart contracts, which are designed to execute the terms of an agreement the instant a transaction takes place. For example, if a consumer decides to purchase a book through a merchant that accepts cryptocurrencies, the moment the terms are met, payment is remitted. This is completely independent of the customer swiping a card, handing over cash, or mailing a check. Thus businesses don’t have to worry about bad debt once a smart contract is in place.
Second, businesses, and therefore consumers, will save money by switching to blockchain based platforms. By cutting out the intermediary, whether a bank, credit card company, or other financial institution, fees decrease dramatically. Because the blockchain platforms allow direct communication and interaction between buyer and seller, there is no middleman to take a slice of the pie.
Blockchain payment platforms are still in their development phase, but there is hope that they’ll be in full swing by the end of 2018. Companies like Jincor are launching their ICOs this year. Jincor’s, in particular, will begin on November 15 and help fund key platform developments that should see the operating system in production mode by Q4 2018.
Though intimidating at first, blockchain technology has a lot to offer businesses. It can be used to increase the chances of receiving payment and to cut costs. These platforms also benefit consumers, allowing them to have the peace of mind that their transactions are secure and that they are dealing directly with a verified business.