The Future of Global E-commerce Transactions
Smart contract blockchain
A financial infrastructure that can support how the Internet will continue to grow is necessary. However, as a trade-off for ensuring the integrity and security of financial transactions, financial institutions have constantly hampered innovation and growth.
A financial network should be fair, transparent, efficient and inclusive, unlike ours today:
1. The payment network today is far from perfect. Transaction costs and time — especially for cross-border payments — are excessive and inefficient. For overseas purchases, consumers usually pay additional fees amounting to 3–5% on top of the original purchase amount. Likewise, merchants who receive the payments have to pay 2–5% in transaction processing fees and some have to wait 2–3 days for the funds to reach their account.
2. There are no reliable methods to assess the trustworthiness of buyers and sellers. The reputation systems in current online marketplaces try to partially address the problem through user ratings alone, but this system is highly subject to abuse and fraud and it is typically not transferable to other marketplaces or contexts. Likewise, for merchants, consumer fraud is another huge problem: card fraud is expected to rise to US$31.7 billion by 2020, with 92% of online merchants maintaining that fraud will remain a prime concern for online payments.
3. There is selective and deliberate exclusion from our financial systems today. This is especially prevalent and obvious in Southeast Asia (SEA): 73% of the 600 million SEA residents have no formal access to financial institutions. This leaves about 400 million people in the region without a bank account, preventing them from saving, borrowing or investing money properly. As a result, they often have to rely on alternative financial institutions like pawnshops or loan sharks for payday loans where interest rates can be as unreasonably high as 100% APR per year.
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