Escrow and The Blockchain - A Perfect Match

Online commerce has made it quick and easy for shoppers and consumers to buy whatever they need, from pretty much anywhere in the world. Digital currency and internet access has made shopping a hassle-free endeavour. From a vendor perspective, online commerce has helped businesses grow and reach wider markets. Merchants are able to sell to global audiences with fewer geographical constraints. According to Oberlo, in 2023, an estimated 2.64 billion shoppers will have completed at least one online purchase, (1) many of these purchases coming from businesses outside the buyers home region and country. 

The e-commerce sector is booming. However, as with any other industry, there are issues that can affect deliverables and reputation. A significant problem in e-commerce is the issue of ‘fraud’, be that products, payments or reviews. E-commerce fraud affects both buyer and seller alike, whether from faulty or inconsistent goods, fake reviews, or insincere claims that lead to unfair chargeback costs or replacements for items that should not be replaced. There are many nuances to fraud within the industry, and these issues are sometimes tricky to entirely address.

The Solution To Online Commerce Fraud

Have you ever been burned by an online purchase gone wrong? If you have, you're not alone. With the rise of online shops and marketplaces, it is sometimes difficult to find a reputable seller, especially with smaller ticket or specialised items, that might not feature on more well-known platforms. Security protocols are not always at the forefront of every e-commerce platform, and with limited legislation and controls, scammers can find ways to compromise the item you buy in good faith. 

But what if there was a solution that combines trust with new-age technology? Before we investigate, let us first imagine this scenario:

Jane is an avid fashion blogger and is accustomed to shopping online, whether from larger brands or small independent stores. So far, her online shopping sprees have been smooth sailing, but her luck appears to have run out.

Jane finds a retro shop selling vintage bags at a large discount. The site looks legitimate with a return policy that allows her to easily return the bags for a swap or refund. Satisfied with what she sees and has read, Jane spends over $2,000 on a few handbags.

A week passes. Then another. A month comes and goes. At present, Jane has waited two months for her items, apparently in vain. According to the merchant, the handbags have been shipped, but Jane never receives them.

Jane is unable to come to a resolution with the merchant, who insists that the items have been shipped. She instead tries to get the bank to reverse the charges on her card, which they eventually do, after a significant amount of time has passed, not to mention the time spent trying to get her refund and the stress the incident has caused. It is not unusual for people to write-off their purchases as a bad experience, and forgo the hassle of trying to recover their items or expenses.

Blockchain Powered Escrow

With the use of blockchain powered escrow and crypto payments, the problem Jane faced will be a thing of the past for the next generation of shoppers.

Blockchain technology utilises a process called ‘escrow’. An escrow is a third-party-held agreement where goods or money are retained until both parties fulfil their obligations, ensuring the validity and fulfilment of the purchase made. Escrow by itself is a good safety net, but by combining it with the power of the blockchain, it becomes a formidable feature to protect both shoppers and merchants.

The blockchain is a decentralized digital ledger where transactions are recorded publicly. Each transaction is verified across multiple validators, ensuring that it's almost impossible to alter or delete the information once it's confirmed. Using smart contracts, the trustworthiness of the blockchain and the reliability of escrow can be merged to make online shopping safer and secure. 

At GM.co, we provide blockchain powered escrow that ensures crypto payments held in our smart contract are automatically released only when the right conditions are met. This is made possible by allowing shoppers to shop with cryptocurrency.

Let’s Learn How A Blockchain Powered Escrow Works

Jenny found an online shopping marketplace where she can shop with crypto, that sells her dream heels. As the price of the shoes is expensive, she was in two minds about getting them at first, due to a previous bad experience buying a high-priced item online.

After exploring the marketplace, she learned that it provides a blockchain powered escrow service. Her confidence increased, because Jenny knows that with escrow she can be assured that her crypto payment will be safely locked away in a smart contract, only to be released to the business once she receives her purchase.

Blockchain powered escrow gives both the shopper and merchant the peace of mind. No more long calls with the banks for shoppers to get their money back nor chargebacks that would eat into a merchant’s bottom line. Everything on the blockchain is transparent and trustless which will significantly reduce cases of e-commerce fraud.

GM.co Blockchain Powered Protection

References

1) https://www.oberlo.com/statistics/how-many-people-shop-online