Online commerce in the Western world and beyond is dominated by partnerships like eBay and Paypal which have changed the landscape of shopping forever. The amount of e-commerce done on occasions like Cyber Monday and the success of platforms like WooCommerce and Shopify speak to this new era of economics. But this reality is out of touch with and in some ways at odds with the new direction towards a more decentralized internet.
Chief among the drivers of this new direction is blockchain technology, which can dramatically change the possibilities for customer-business interaction. A new blockchain startup, Monetha.io, is aiming to create a platform that leverages the main features of crypto technology to offer a markedly improved experienced for all involved off the back of their recent successful ICO.
Gaps in the e-commerce business model
Part of the reason sites like eBay and their partnership with Paypal have been so successful is that they act as a theoretically trusted middleman between the customer and seller. But there is a multitude of structural and emergent drawbacks to such a situation.
Most notably, this situation requires the middleman to be paid; with eBay and Paypal (to name just 2 actors in the space) charging together about 4% on every transaction.
Then there is the issue of security and transparency. Paypal, in particular, has been implicated in a constant pattern of opportunistic behavior, from withholding payments to make more profit to closing accounts of users for no reason (except for their own gain). This is by nature intransparent, and furthermore doesn’t even account for the actual users themselves engaging in fraud.
Finally, there is the issue of inefficiency. Smart contracts clear payments without the need for manual oversight which would free up resources in such a new system. Related to this is the fact that many users of cryptocurrencies have chosen for these kinds of investments for their ease of use. This means that there is a large number of users that have crypto deposits that they cannot spend online easily.
Refining the online customer experience
Monetha has pitched their value proposition as being able to leverage the trustless and transparent nature of an integrated blockchain-payment platform. Things like seller rating are intuitively amenable to blockchain transactions, guaranteeing that ratings and feedback are real. Sellers can also be assured that they will get their money due to the smart,contract-based nature of Monetha.
This is made possible due to the Ethereum basis of the system, which utilizes ERC tokens. Smart contracts are therefore an integral part of the system. They also claim payment times orders of magnitude quicker than conventional options, as well as handling fees that are a fraction of the price.
As per the Monetha whitepaper:
“Most people are unaware of just how many stages there are in a single VISA or Mastercard transaction. An accepted transaction is only the beginning of a long sequence of intermediary transfers before it lands in the merchant’s bank account days or weeks later. Time is money, which is why Monetha transacts in a matter of seconds.”
They discussed their product further:
“Monetha will charge a 1.5% transaction fee from merchants. Of that, 0.5% will go to
a “Voucher Smart Contract” in a for of MTH for Monetha token holders for an ability to use that in the Monetha’s ecosystem and other 1% will go to the company as revenues.
An interesting fact is that the average traditional payment gateways take approximately only 0.25% + 0.1 from total fee as their revenue. This 0.25% + 0.1 is a mark-up fee to the interchange rates.”
A successful ICO
Monetha raised a huge amount of investment last year through their ICO, $37 million in 18 minutes. That being said, their ICO setup was not without criticism. One Redditor pointed out that:
“Monetha will charge a 1.5% transaction fee from merchants. Of that, 0.5% will go to a “Voucher Smart Contract” in a for of MTH for Monetha token holders for an ability to use that in the Monetha’s ecosystem and other 1% will go to the company as revenues. On top of that only 50% of the tokens issued in the ico go to investors, this also means if Monetha were to sell all of their tokens, they would still pocket 66% of all future revenues. At this current model, investors are really only getting 16.5% (33% x 50%) of the revenues generated from Monetha.”
But they still got a lot of publicity and investment, partly due to the experienced team they have on board. Overall, the project is quite ambitious but seems to be taking the right steps to achieving its goals.