top of page
Blog: Blog2
Search

It is time for Online Merchants to boost their profit margin with TRIO Alternative Payments.

Updated: Mar 15

Consumer transactions lead the Digital Payments market segment, including payments for products and services made over the Internet. Digital Commerce (powered by credit cards worldwide) have a projected total transaction value of US$5.49tn in 2022, growing at a 12% annual rate (https://www.statista.com/outlook/dmo/fintech/digital-payments/worldwide.)

Credit card processing fees typically cost a business 1.5-3,5 % of each transaction. This is a direct cost of using Credit Card network infrastructure. One must add an indirect cost of using CNP (Card Not Present) online - False Declines. Online Merchants are on the front line of the war against fraud ( typically - delivering goods or services to fraudsters).To keep fraud below the 1% level, many transactions are declined, and many are refused falsely.

It is difficult to estimate the exact number of legitimate transactions declined by fraud prevention algorithms because it varies depending on several factors, such as the specific algorithm used, the type of transactions being processed, and the industry or market in which the transactions occur.

However, it is common for fraud prevention algorithms to decline a small percentage of legitimate transactions to ensure high security and reduce the risk of fraudulent activity. This is known as a "false positive" and can occur when a legitimate transaction is flagged as potentially fraudulent based on specific criteria, such as the location of the transaction or the type of payment method used.

According to a report by Experian, the overall false positive rate for fraud prevention systems in the United States is around 7%, meaning that roughly 7 out of 100 transactions are declined incorrectly. However, this rate can vary widely depending on the specific system and industry. In some cases, the false positive rate can be as low as 1-2%, while in others, it can be as high as 20-30%.

Therefore, the number of False Declines is estimated to be 7 % of all transactions. In addition, many transactions end up with chargebacks, estimated to be 1% of all merchant transactions. The direct cost, false declines, and chargebacks total a hefty 10 %.

It would be a massive win for Online Merchants to keep this chunk of additional revenue and add this to their net profit margin.

The following scheme describes the usage of the TRIO blockchain ecosystem for Online Trade:



The scheme starts with paying the required amount of ETH from the Buyer (consumer) to the Seller (merchant).

This payment may be a legitimate blockchain transaction or a fraudulent blockchain transaction. Fraudulent blockchain transactions are filtered out using Online Audit with TRIO IAM, using TRIO API (https://id-bound.wixsite.com/home/post/what-can-go-wrong-with-p2p-payments-and-how-trio-fixes-them). Only legitimate blockchain transactions will result in Buyer's Identity and Physical Address passed to Seller (merchant). Then - the Seller sends the Goods to the Buyer's address. Delivery is the full responsibility of the Seller.

Once the goods are delivered to the Buyer, he may be unsatisfied with the Goods supplied. In this case, he must return the Goods to the Buyer before requesting legitimate Chargeback.

The above scheme has enormous advantages:

  1. The direct cost per transaction is 0.1%.

  2. There are no False Declines since the TRIO transactions are fully deterministic.

  3. The friendly fraud resulting in a chargeback is eliminated.

The above scheme is clear to all parties involved, and there is no need for costly and time-consuming customer dispute resolution. There is nothing to dispute since fraud and theft are eliminated by design.


Indeed, credit card networks are faster than present blockchain networks. To this end is highly advantageous to implement Proof-of-Sequence using TRIO API as described here https://medium.com/@sales_32386/how-to-achieve-a-better-decentralized-better-scalable-and-more-secure-public-blockchain-944363743ddf.




31 views0 comments

Recent Posts

See All

Comments


bottom of page