Privacy in Commerce

With the possibility of reversal, the need for trust spreads. Merchants must be wary of their customers, hassling them for more information than they would otherwise need.

- Satoshi Nakamoto, Bitcoin Whitepaper\

Due to the need to track customers to prosecute fraudulent behaviour, merchants who use legacy payment systems are forced to request details from customers that don’t relate to the nature of the commerce, and serve no purpose other than to back-stop the merchant’s liability in the case of fraudulent actions. Despite this, the cost of prosecuting fraudsters who abuse the payment system is prohibitive for smaller transactions, and merchants only recourse is to keep records of bad actors so that they can decline their business in future.

This represents a huge problem for the privacy of good actors within the system, as their identity details often end up being stored in large merchant databases with their corresponding payment details. Merchants do not often spend the time or money needed to adequately secure this information and breaches in customer privacy have created situations where thousands or millions of customer details have been leaked onto the dark web, causing financial and identity theft all over the world.