A Decentralized Take on Consumer Protection with HIPS Merchant Protocol (HMP)

With the advancement in tech, trade processes have benefited. The internet has contributed to the boom of e-commerce since the early 2000s. Unfortunately, advancement & innovation has often been a double-edged sword. With trade processes becoming easier, bad elements have taken advantage of their ease.

Electronic Fund Transfer Act and 3D Secure Scheme protect Merchants and Consumers in the payment ecosystem. As a result of these systems, merchants were better protected, but so were their customers. However, merchants dislike chargebacks as they are bad for their business.

Globally, merchants have embraced crypto payment because crypto and blockchain technology allows payer authentication and ensures payments are final; there are no chargebacks so merchants no longer experience a chargeback problem. But, this has also eliminated the customer’s comfort in knowing that a transaction can be disputed should there be a problem with the product and the merchant support refuses to help.

What is the HIPS Merchant Protocol (HMP)?

HIPS Merchant Protocol (HMP) is a solution that would protect the consumer if the merchant did not deliver the goods or services paid for by the cardholder. The protocol, alongside its gateway (HMP-gateway) and the governing Merchant Token (MTO), brings this solution to any blockchain with the support of smart contracts.

The protocol will work on blockchains like Ethereum, Cardano, and Solana. Alongside its ability to work on different blockchains, the protocol has its native blockchain.

How Does HMP Work?

The protocol works by holding a consumer’s payment for a product in escrow instead of going directly to the merchant. The amount in escrow is subjected to dispute management to determine if the merchant is eligible to claim the payment.

Two types of dispute management resolve the rightful claim to payment. They are the Automatic Dispute Management (ADM) and the Community Dispute Management (CDM)

Automatic Dispute Management (ADM)

In ADM, the payment made by the consumer is held until after the escrow time has elapsed. The escrow time duration varies with the product’s final delivery time and the merchant’s reputation.

A decentralized oracle calculates the merchant reputation based on successful “non-disputed” escrows over a given period, the age of address, the total processed amount on the address. The merchant can withdraw from the escrow if he has a high reputation score or if the escrow time has elapsed without a dispute from the payer.

If there is a dispute signal from the payer, decentralized oracles calculate the reputation of the merchant. If the merchant has a low reputation level, the smart contract will start a chargeback, and the payment is reversed back to the payer.

Community Dispute Management (CDM)

In CDM, a community consensus decides if a dispute should be approved or disapproved. The process is like ADM, except there is no merchant reputation calculated for the merchant. When there is a dispute, we have two random agents look into it and achieve a consensus. The merchant or the payer is then awarded the payment, depending on the agreement reached by the agents.

The Merchant Token (MTO) and Merchant Coin (MEO)

The merchant token (MTO) is a governance token on the Ethereum blockchain. Since the HMP will have its native blockchain, the Merchant coin (MEO) is the main currency on the Hips merchant Blockchain. It’s also a utility and governance token, just like MTO.

The merchant coin will be the main currency of the whole ecosystem. The ERC20 Merchant Token (MTO) will be 1:1 convertible to Merchant Coin (MEO) when the Hips Merchant Blockchain’s Mainnet opens.

What makes the HIPS Merchant Protocol unique?

Hips Merchant Protocol has several unique ideas and features that make it a potentially attractive solution for various consumers, merchants, crypto investors, traders, and enthusiasts. A few of them are highlighted here:

A big market share for the taken

In the payment ecosystem, traditional payment methods like VISA, MasterCard, American Express rules. With crypto and blockchain technology adoption, crypto payments can take a significant market share if mainstream consumers accept them.

HIPS customer protection solution puts them in an excellent place to tip consumer’s interest in their favor.

Integrations

Hips merchant protocol is built for Ethereum and Solana giving it a stable and scalable foundation. Solana is a superfast public blockchain that can support over 50,000 transactions per second, has block times of 400 milliseconds, and a transaction cost of roughly $0.00001.

Solana’s foreseeable roadmap to 1 million transactions per second and 150ms block times puts Hips in a position to support the activity on Visa, Mastercard, and all the US-based exchanges combined.

Community participation

Community Dispute Management allows any token holder to increase their token holdings by getting involved and actively participating in dispute cases.

Access & Strategic Partnerships

HIPS Payment Group is the company group behind the protocol and processes to date payments for over 200,000 merchants globally. Hips will use 25% of the issued tokens to secure strategic partnerships and secure adoption among its customers and partners.

This partnership will give them access to millions of potential customers.

How far is HIPS Merchant Protocol in its roadmap?

• So far, HMP is currently doing its ICO, which will end June 30, 2021. They plan to get listed on Uniswap DEX on July 12, 2021.

• The complete, up-to-date roadmap can be viewed on the official Merchant token website.