Ecommerce is booming. By 2020 more than 4.058 trillion USD will be exchanged online yearly. For many people, especially outside the United States and Europe, there are massive problems with choosing a functioning payment gateway, a fancy term for the company which handles the funds used to pay for an item, from consumer to business owner. The system is not built on trust and so the gateways charge higher fees ranging from 2% + 0.1 to 6% + 0.7, with chargebacks up to $15. Additionally, there is no easy way to process Ethereum payments right now. Monetha is in position to disrupt this market first, with the introduction of its trust/reputation based utility token, and it could eventually go to war with Paypal and Stripe in the future.
The token sale will run from August 31 to September 30, 2017 and will be soft capped at 7m Eur, no hard cap has been announced yet. 60% of tokens will be sold during the crowdsale; 10% will go to advisors, bounties and campaign costs; 15% will go towards the loyalty program and 15% will be kept by the team and be vested for 12 months by smart contract. Until the soft cap is reached the rate for Monetha tokens will be 1 ETH = 2400 MTH, afterwards it will lower to 1ETH = 2000 MTH.
Monetha is a mixture of Paypal and Trustpilot, a payment gateway and reputation system using blockchain technology. This transparent system records “time of the transaction, both receiving and sending wallet addresses, warranty conditions, delivery time, and all other information that is typically needed to ensure trust.” Both consumers and merchants can then review, file claims and rate each other. Any time one of these actions is completed by either party’s trust level will automatically change.
When I spoke with Justas Pikelis and Laurynas Jokubaitis, they envisioned that retailers listing their trust score on their websites and also enabling millions of entrepreneurs in Asia who want to sell online, buy cannot keep up with Alibaba’s race to the bottom. Monetha gives them the chance to distinguish their online profile and earn trust across all ecommerce platforms. Trust is an important commodity in the digital age. In their whitepaper is a great quote by Kevin Kelly:
A pretty good society needs more than just anonymity. An online civilization requires online anonymity, online identification, online authentication, online reputations, online trust holders, online signatures, online privacy, and online access. All are essential ingredients of any open society.
The blockchain on the one hand provides true anonymity and security, but at the same time, in order for any business to be completed, trust needs to be built to show past positive results. “Monetha’s trust and reputation system will be universal, transparent, transferable, self-executing, not controlled by a central authority, and working flawlessly together with a payment solution.”
Merchants will be judged on how quickly they ship items, if the items match their description, how quickly they react, and client reviews. Depending on the platform and item, varying importance will be given to each of these factors
A consumer’s trust rating is linked to their wallet, starting from the first time the use Monetha. As the consumer purchases more products, leaves more reviews and demonstrates their overall value, the trust score rises. If a score falls too much, merchants could automatically deny selling to them. I can even imagine a stores that require consumers to have purchased a certain amount using Monetha before they are allowed to make a payment.
Monetha’s app handles claims and reviews, storing all of the information on the blockchain. If a consumer makes a purchase and is unhappy, they can make a claim, instantly lowering the merchants trust rating. To return to their previous trust level the merchant will have to resolve the claim. By using this enterprising incentive system Monetha will keep both consumers and merchants engaged with each other.
It will be interesting how the trust system is used. It could just be a check to determine if the buyer meets the necessary requirements to make the purchase or it could be a star or percentage system. The API makes it so the data can be parsed and displayed any way. There are many possible ways for the trust score to be compiled, however, if there is wide acceptance of the token, I can imagine a rating agency starting solely to rank merchants and consumers and establishing a formal set of rules.
Ultimately, the trust system will reduce fraud, as scammers and frauds will quickly lose their trust rating from their poor business practices. Furthermore, chargebacks and fraudulent payments are not possible because of the blockchain, they simply disappear and improve the overall efficiency and lowers the cost of the system.
At first payments will only be possible in Ethereum. Once the funds are sent, Monetha will automatically exchange it to the merchants preferred currency, crypto or fiat, and deposit the funds into their account. They say that total transaction times will be around 2 minutes. There is no clearance, no settlement and nothing slowing down a payment.
What a stark difference to Paypal and Stripe. I’ve read horror stories online about how many merchants doing 50k+ a month have had their account and funds frozen for 6 months until they were released. Paypal and others gives merchants no control over their payment system and they don’t care about the needs of the merchant. If they have to shut down their business because of the wait, it’s not Paypal’s problem. Monetha puts an end to draconian practices like these.
Monetha cuts out the middleman and directly connects merchants with consumers, making their account “equivalent to a bank account that stores funds and enforces security.” To mitigate cryptocurrency risks, merchants can also choose how often they get paid and in what currency. There is risk working with crypto, but having the ability to choose to cash when needed further creates trust in the system.
Monetha retains control of who can access their network, and while they cannot prevent a transaction from taking place, they can determine which merchants are able to use their system. This will keep out dark net ecommerce stores, marijuana shops and other illegal entities. Monetha wants to establish itself as the primary cryptocurrency for ecommerce business owners and they must preserve their reputation to do so.
One of the biggest reasons I believe Monetha will ultimately succeed is their transaction fees. They will charge 1.5% on all transactions, in comparison to traditional merchants that charge from 2%+0.1 up to 6%+0.7 per transaction.
Let’s take Paypa as an example, they charge 2.9% plus $.30 for US residents. Additionally, they charge an additional 2.5% charge for any currency conversion and a 1.5% international transaction fee for international sales, fees for chargebacks, uncaptured authorization, card verification transactions, refunds and for American Express card usage. This isn’t even the whole list!
For a merchant doing 100,000 USD in revenue a month, he would only pay 1,500USD versus $3000+ with Paypal, saving him 1500 USD a month or 18,000 a year! Even with the 2-3% transaction cost to purchase Ethereum, which eventually will come down over time, there will be significant savings using Monetha. Traditional payment gateways charge more fees than the percentage above as well, there are chargebacks, currency exchange fees, and many more. The savings difference is real and is the biggest USP.
From this 1.5% fee,”0.5% will go to a smart contract for Monetha token holders and the other 1% will go towards company revenues.“
Consumers also receive 0.2% of their total transaction cost in Monetha tokens as part of the loyalty program. These tokens can then be applied to other items the consumer wants to buy. These reward tokens cannot be exchanged for other crypto currencies and can only be used within the system. If the consumer fails to use them for 6 months, the tokens are reverted back to the loyalty token pool. As consumers increase their trust rating, a merchant can increase the loyalty reward given.
Monetha was co-founded by Andrej Ruckij, Justas Pikelis, and Laurynas Jokubaitis. They all previously worked together on creating a non-blockchain payment gateway, and they have various backgrounds in advertising, marketing, consultancy and IT. They have brought severl heavy hitters onto their team as well, Eric Duprat, formerly Paypal general manager of mobile and Kellogg N. Fairbank, former VP Sales/Head of Business Development for Braintree Payments in Europe.
The team has a solid roadmap, they want to start with just processing Ethereum, then develop accepting Ethereum-based tokens, and then finally taking funds directly from a bank account, processing the payment with the Monetha system and then depositing funds into the merchant’s bank account. During our chat they said they wanted Monetha to eventually become invisible, yet used by everyone.
Their first step though is adoption by some of the major ecommerce platforms, such as Shopify, BigCommerce and Revel Systems. If they can land a placement with any of the major player’s I believe it will have the most significant impact compared to individual adoption. Partnering with Shopify would give Moneth instant access to hundreds of thousands of merchants who have established stores and want to integrate their system.
STRENGTHS & WEAKNESSES
As someone who has set up a Shopify site and dipped my toes into ecommerce, Monetha is an innovative blockchain solution. Unlike a lot of other ICO’s their coin actually has real utility and they are not just trying to crowdfund. I know how much it sucks to wait days for a payment to clear or have funds frozen while Paypal conducts and investigation and verifies a transaction. A decentralized system takes this draconian power away from payment providers and returns it to merchants and clients.
The trust system is also innovative. Companies want their consumers to engage. Amazon benefits and their value increases every time a customer writes a review. It creates a record of someone’s personal satisfaction with the transaction and serves as a reference for future buyers. Monetha takes this model and applies it to every transaction on their system. There will be no place to hide for scammers and frauds in the future if they can develop their trust system properly.
Once the system has been adopted, a large part of their business will come from selling their blockchain data to big data companies for study and analysis. The record of every transaction made ever using their token will be highly valuable and I expect this to become a large part of their business in the future.
The biggest question going forward will be adoption. Can they break the stigma of cryptocurrencies only being used by criminals and tax cheats and establish their token as the benchmark for all future payment gateways? It’s my own personal belief that in the future, we all will use some form of blockchain technology in our daily lives, even if it’s unapparent. The technology will not be as cumbersome and tech heavy as it is now and will blend in to daily life. I see Monetha as a good candidate to be one of the major blockchain innovators to last into the next decade or two because their payment gateway is almost invisible. If they can manage to include fiat to Monetha to fiat payments in the future, they truly will become a powerhouse.
Another big question is how will their major competitors respond. Paypal and Stripe setting up their own competing system on the blockchain could hamper Monetha’s grow and impact revenues. Monetha will be first to market though and delivering a service no one has implemented before, giving them a head start. The burden will be on their competitors shoulders to build a better product and take market share away from an already established company. More likely, Paypal and Stripe pay Monetha a monthly fee to access their API and then implement it in their own established systems.
On the tech side, as the Ethereum network grows, there will be issues of scaling. Bitcoin has already encountered these problems and now transactions can take upwards of 15-20 minutes to process. For Monetha, which could be processing millions of transactions a day, this could be a significant problem. For now, they have no solution until the issue is solved in general. Positively though, Monetha is a “blockchain agnostic solution. which basically means that Monetha can run on any blockchain that has solved scalability and security issues and has smart contract capability.”
After speaking twice (the first interviewed didn’t record) with the team, I believe they have a solid vision of how they want to grow into the future. The biggest issue they face is adoption, first, can they get their payment system approved and accepted for use by the major ecommerce providers and second, can they then convert enough people to start using Ethereum to make payments for online goods. The potential of cryptocurrencies and their implications for all tech leads me to believe that Monetha, or a system like it, will rise to be the major payment gateway and displace the majors, such as Paypal and Stripe, in the future. It will be a slow shift, but ultimately, it will be better for the consumer and merchant, the two most important people Monetha had in mind when creating their token. Read their whitepaper on their home page and get in touch with me if you have any questions.
My question for you is what implications do you think Monetha will have? Do you think it can achieve these adoption rates? What issues do you have with it?
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