The use of blockchain technology in retail is becoming more imperative every day. With many proven benefits, shops will soon fall behind if they’re not utilising this exciting, revolutionary technology.
Whilst blockchain won’t change retail tomorrow, over time it’s going to have a massive impact on the industry as a whole. Here we will go through some of the use cases blockchain technology currently has within retail.
A study by Juniper Research, a financial technology and payments analyst, claims retailers who implement blockchain will benefit from increased standardisation for payment processing and a substantially lower risk of error.
As a result, processes will be more secure and less costly. “This, in turn, would allow money transfer companies to become more competitive, reduce fees to end users, and thereby experience high usage volumes,” the report states.
The study suggests that with retailers increasingly offering localised payment mechanisms and friction at checkout reduced by stored credentials, migration from offline to online is likely to accelerate.
Money transfer is expected to be a key growth area, bolstered by the rapid expansion and adoption of social payments. The consumer spend on digital commerce is forecast to reach $14.7 trillion (£10.9 trillion) by 2022, up 60% on last year’s figure of $9.2 trillion (£6.9 trillion).
Improving the checkout experience
Blockchain technology is precisely the sort of development that can change the face of the online shopping process. Consumers using a platform based on a decentralised ledger are privy to a more seamless experience that doesn’t sacrifice their privacy. With zero-knowledge storage, an individual can simply upload their payment details (or identification, for verification purposes), encrypt them, and store them in a container visible only to themselves.
This ensures that they retain full ownership over their own data, but at the same time allows them to reveal it at checkout. It’s a stretch to say anything is ‘unhackable’, but blockchain technology comes close. To compromise the network, a malicious actor would need to control over half of the nodes validating transactions, and considering these are spread across the globe, such a feat is technically impossible.
On the convenience front, when it comes to payment, there’s no fiddling with a plastic card or squinting to read the various bits of information as you type them in. The user can authorise payments without any of the traditional hassles.
Blockchain enables smart contracts to be used within retail. Smart contracts offer endless opportunities and uses. The security features and the ability to record all steps in a transaction lends smart contracts perfectly to scenarios where ownership is being transferred.
Smart contracts can even be used for paying out insurance policy claims. For instance, there can be a smart contract for a flood insurance policy, linked to data from the Met Office. When the data feed shows the threshold is met, the policy would automatically pay out claims.
Smart contracts are very transparent, meaning all parties can see everything that happens on a particular transaction – for example, you can track clear ownership rights of certain products. They also help to ease the hassle of collection and enforcement under traditional transactions. Another added benefit is they can settle conflicts without the hefty documentation or court proceedings that go with every case. Blockchain and smart contracts allow documents to be stored on a digital ledger, allowing customers to not need receipts or insurance documents.