Blockchain presents advantages of increased safety and lower costs in international as well as domestic payment transactions. It can also replace paper-based and manual purchase orders and other trade documents, using “smart” contracts.

Yoav Kutner

Blockchain stands to have a dramatic impact on B2B e-commerce. If you are unfamiliar, blockchain is the technology behind cryptocurrency that allows users to make and record digital transactions. Blockchain is also the underlying technology behind Bitcoin, the digital currency that has found its way into some of the largest online retailers.

Blockchain technology is, at its most fundamental level, a distributed ledger shared across a peer-to-peer network that contains records of secure transactions, making them both accessible and visible to multiple participants. Entire transaction histories are available for verification because the ledger is protected by sophisticated cryptography.

Blockchain can facilitate many things, from the transfer of financial securities to gift cards, mobile minutes, energy credits—even loyalty points.

The use of cryptographic signatures prevents fraud, making blockchain-based transfers among the most secure of all types of online transactions. That security is beginning to attract traditional financial institutions, which are beginning to advance into cryptocurrencies and blockchain networks. In November 2017, Visa Inc. announced that it would pilot a blockchain-based B2B payments system called “B2B Connect,” designed to enhance the speed, security and reliability of B2B transactions.

But the application of blockchain goes far beyond Bitcoin and monetary transactions. For B2B entrepreneurs, blockchain can facilitate any number of things, ranging from the issuance and transfer of financial securities to gift cards, mobile minutes, energy credits, and even loyalty points. Blockchain technology could also reduce friction points for B2B businesses that handle high-value, high-volume orders that involve multiple layers of suppliers and distributors. And the technology allows business owners to use smart contracts, which can reduce inefficiencies at most stages of a deal-making process.


According to the World Economic Forum, blockchain technology could account for as much as 10% of global gross domestic product by 2027. That said, why should you invest in blockchain, and how can you get the technology to work for you?

Secure Payments

If your company is like many B2B merchants, most of your transactions are carried out using checks, wire transfers and automated clearing house (ACH) methods. In other words, they are slow, costly, and subject to fraud.

A 2017 AFP Payments Fraud Survey found a dramatic increase in B2B payments fraud since 2015. Some 75% of companies surveyed said they were hit with check fraud in 2016, up 4% from 2015. And 74% said they fell victim to business email compromise (BEC) scams, which typically involve fraudulent wire transfers.

If that’s not enough to unsettle you, be aware that the typical organization loses 5% of its revenue to fraud each year, according to a study by the Association of Certified Fraud Examiners. Unfortunately, fraud can go unnoticed within a business for a long time, and it is usually a challenge to uncover and trace.


Want to protect yourself? Here is where the advantages of cryptocurrency kick in. In contrast to traditional payment methods, blockchain payments do not require providing personal identification information such as names and addresses when making cryptocurrency purchases. In addition, because blockchain is a distributed digital ledger, there is no central administrator or single centralized record of transactions, resulting in no single failure point. Instead, management and authorization are spread across the wider network, leaving no obvious focal point for individuals to initiate fraud schemes.

Smart Contracts

“Smart” contracts have the potential to be even more useful to B2B entrepreneurs than cryptocurrencies. Smart contracts take the form of lines of code to form digital agreements between parties. The best part? The contracts automatically implement themselves.

To give you an idea of how one could work, imagine you are a seller executing your end of a deal. A smart contract would immediately transfer the payment to your account, according to the instructions embodied in the contract code. These types of contracts can fulfill any number of agreements, including payment and shipment of a product.

Transparent Fees


Hate paying processing fees? Blockchain-enabled crypto-transactions can help B2B merchants save substantially on fees and eliminate the risk of chargebacks.

For example, take your typical credit card transaction. A purchase ropes in four parties: the merchant, the acquirer (in this case the credit card company), the issuer (the cardholder’s bank), and the individual cardholder. Traditional transactions involve multiple layers of players, resulting in slow processing times and unnecessary fees. By contrast, cryptocurrency changes hands through direct peer-to-peer transactions, making it both faster and cheaper. Fewer parties are involved, so fewer people and institutions need to be paid.

International Business

Is your company doing business across borders? Foreign transaction fees are a huge pain point for B2B e-commerce merchants. According to a recent survey by DHL Logistics, cross-border B2B transactions are expected to reach $1.2 trillion within the next five years. A typical international wire transfer costs anywhere from $22 to $50, in addition to currency exchange fees. By contrast, most Bitcoin payment processors, such as Coinbase, charge a flat 1% fee for converting Bitcoin into a local currency.

Cryptocurrency can transmit payments globally in multiple currencies with complete security, without the involvement of banks or governments. It potentially offers a highly appealing solution for payments where political instability is a factor, including in such emerging markets and less-than-fully-stable Third World countries.


Secure Supply Chain

Deals across borders can be fraught with friction, especially in the B2B world. The movement of information between third- and fourth-parties complicates transactions, which can delay supplier payments and disrupt the reconciliation process.

According to IBM, blockchain technology results in faster, permissioned, and auditable B2B interactions between buyers, sellers and logistics providers. It augments such established B2B integration technologies as EDI, XML, and API-based B2B with new, shared visibility for transaction and information flows.

Blockchain technology can even replace paper-based and manual purchase orders and other trade documents, using smart contracts. Real-time visibility into supply chain and trading data can result in smarter decisions about procurement, inventory, investments and financial positions.

Blockchain, of course, won’t be the magical elixir to every B2B transaction. Obstacles include the regulatory environment, standardization efforts, and the lack of an established legal framework. But it increasingly appears to be worth consideration and possibly investment. It could end up being one of the most important technologies to shape the infrastructure of the next generation of financial transactions.


Yoav Kutner is founder and CEO of Oro Inc., an open-source business technology company serving B2B merchants. Kutner is also the co-founder and former chief technology officer of the e-commerce platform Magento.