Building a Proper Cross-Border Marketplace with Bitcoin & the Blockchain
The concept of cross-border marketplace solutions has been intriguing the digital currency community for quite some time now. Keeping in mind how Bitcoin payments can take place across borders without any currency conversion along the way, it only makes sense to develop a business model that plays to those strengths. But there are other financial players looking to achieve the same goal, such as PayPal and Aramex.
Also read: The Decentralized Marketplace: Bitcoin’s Next Killer App
The Traditional Financial Cross-Border Marketplace
Up until this point, there has been no such thing as a global cross-border marketplace in the financial world. Auction sites such as eBay are perhaps a concept that comes relatively close to achieving that goal, but even such a service is not available anywhere in the world. Now that PayPal and Aramex have joined forces, a new breed of cross-border marketplace will see the light of the day shortly.
Calling the joint venture by Aramex and PayPal, a global marketplace would be taking things a stretch too far, though. At launch, consumers will be able to choose from merchants located in 15 countries spread across all of the continents. Considering there are over 230 countries in the world, this marketplace only represents a tiny fraction of what can be achieved.
That being said, anyone who uses the IShopTheWorld platform will be able to purchase things from all of these merchants, and complete the transaction by sending one payment. From a convenience point of view, this is a major step forward in the world of e-commerce, as no one likes to make 15 different transactions while using the same payment methods for every single one of them.
Aramex Senior E-Commerce Manager Mazen Mourad stated:
“With this innovative marketplace, merchants from across the world – from the US to China – can list easily and free of charge, with no hidden costs such as transaction fees. This is a unique proposition like no other, in the now cluttered b2c marketplaces. Plus, the marketplace eliminates all the hassles of cross-border logistics for the merchants, when it comes to export documentation, customs, clearance and costs.”
However, there is a prerequisite to being eligible for being listed on IShopTheWorld, as the Shop and Ship service needs to be active in that country. At the time of publication, Shop and Ship was only available to 60 cities across the world, which is far from impressive, and another indication this should not be called a global project just yet.
While Aramex is committed to growing the e-commerce sector around the world by offering more products that can’t be found locally, the payments and logistics industries are well behind the curve. As convenient as a one-stop shopping solution might be, the limited availability will not do this platform any good in the long run.
The Concept of a Decentralized Cross-Border Marketplace
Running a proper cross-border marketplace is about much more than using centralized services to make payments and process shipments. When dealing with international clientele, both buyers and sellers should be given the freedom to choose which payment options they prefer, and how to handle logistics themselves.
The venture between Aramex and PayPal is offering neither of those options, as users have to rely on Shop and Ship availability to send goods to other consumers around the world. Additionally, the number of payment methods will be limited to traditional solutions, which are not always available to people in emerging markets.
Bitcoin provides a far better payment alternative, as the digital currency can be used on a global scale without currency conversions along the way. A buyer in the UAE can buy something from a seller in Germany, use Bitcoin to pay, and that Bitcoin will be usable in the same way in both countries. No conversions needed instant payments, and very low transaction fees.
Furthermore, there is the technology powering the Bitcoin network, called blockchain. Unlike what most people may think, the blockchain can serve other purposes besides maintaining a financial network. Because this technology is avilable to anyone in the world with internet access, the blockchain is a prime contender to create a proper cross-border marketplace.
Projects such as OpenBazaar are working towards achieving that goal; as this open source project allows anyone in the world to become their own marketplace. As one would come to expect, the only supported payment method for using OpenBazaar is Bitcoin, as it allows for the usage of an escrow system. Keeping customer funds safe, and protecting both buyer and seller from harm, is the way a cross-border marketplace should work.
What are your thoughts on the concept of a cross-border marketplace? Will the traditional model succeed, or is the decentralized option a better alternative? Let us know in the comments below!
Source: CPI Financial
Images courtesy of Shutterstock, IShopTheWorld, OpenBazaar