Alastair Johnson, Founder and CEO of Nuggets, a UK self-sovereign payments and ID platform makes the case that disruptive technologies such as biometrically-verified, contact-less delivery have a big role to play in growing e-commerce business and streamlining new delivery protocols — Editor.
Even before the Covid-19 pandemic, the demand for e-commerce delivery was spiking.
Now, as necessity takes a firmer hold, customers expect greater convenience and a more dependable service than ever before. However, with growing demand comes further instances of fraud and a worsening last-mile delivery problem.
The single saving grace to arrive from these mounting difficulties is the drive toward innovation. Disruptive technologies such as biometrically-verified contactless delivery are set to tackle both the last mile delivery problem, and fraud, head-on. Here’s how.
According to a report from the World Economic Forum (WEF) entitled ‘The Future of the Last-Mile Ecosystem’ burgeoning demand for e-commerce delivery will result in 36% more delivery vehicles within inner cities by 2030.
Consequently, without prompt intervention, already climbing delivery costs for urban last-mile deliveries could go parabolic. Moreover, having been published by the WEF, January 10, these figures don’t even account for the fallout of the pandemic.
However, there is a silver lining. The emergence of Covid-19 is forcing wider adoption of digitization and contact-less solutions—as well as bolstering the argument toward streamlining global supply chains.
Jumping the last-mile hurdle
When it comes to modernizing supply chain’s there’s no technology more prescient or disruptive than blockchain. According to data from Statista, a German online portal for statistics, more and more retailers, brands and manufacturers are allocating capital in understanding blockchain (38%), testing the technology (13%), and implementing it (10%) than ever before.
The same goes for logistics service providers, 19% of which have actualized blockchain solutions, and for good reason. Research from Ernst & Young (EY) notes that blockchain can improve the security transparency and efficiency of the supply chains, all while cutting costs.
However, blockchain alone is not a panacea. Last-mile delivery services account for 41% of overall supply chain costs. To solve the greater issues facing global supply chains—including their costs and their inefficiencies—we need to concentrate on surmounting the last mile hurdle.
Delivery services are plagued by low-density, inefficient shipments (aka the last mile problem), and failed delivery only makes this issue more critical.
Nearly 80% of respondents to a survey administered by IMRG, the UK’s industry association for online retail, cite home as their preferred delivery location. The problem is, especially as Covid-19 lockdowns ease, most people aren’t at home during the middle of the day—a time where most packages get delivered.
Failed deliveries costs
The costs for failed deliveries have reportedly mounted to over £1.6 bn (US$ 2bn) in the UK alone.
This issue could be easily fixed by fostering immutable biometrically-verified contactless delivery. By merging blockchain’s inherent utility in supply chain control with incontrovertible proof provided by user biometrics, deliveries can be directed (and redirected) to the person, not just their physical address—thus alleviating the last-mile challenge.
Instead of delivering to a location where the recipient is only expected to be—or even risk leaving packages with neighbours—in-person deliveries guarantee retailers and customers that their package arrives where it’s supposed to. This is only possible by creating a verified digital ID.
This method only allows contactless payments and verification but a host of other benefits too, such as removing the need for clunky passwords as well as the requirement for merchants to keep payment and personal information safe.
With this system instilled, couriers can confirm delivery via the biometric data of the recipient—and the recipient only. Moreover, if these verified IDs are funded, they allow for contactless payment and verification, not only satisfying social distancing measures but removing the user from threats of fraud.
Combating Fraud
Delivery services have been forced to adapt to social distancing rules put in place during the Covid-19 pandemic. More often than not, this means that there is no longer the requirement for a signature on delivery. As such, no delivery confirmation is rendered, putting the customer’s package at risk and causing retailers no end of trouble.
Merchants, in particular, have faced a staggering increase in fraud due to this singular problem. This includes an increase in phishing activity where financial credentials are appropriated and used without the owner’s knowledge or consent, as well as chargeback fraud—where customers claim refunds directly from their payments provider after a failed delivery.
According to a recent study, chargeback fraud is the most prevalent type, accounting for 60-80% of all merchant chargebacks. Of course, not all chargebacks are fraudulent. In some cases, they’re simply mistakes.
Nevertheless, whether fraudulent, genuine or merely an accident, chargeback claims burn a hole in retailers’ pockets. With customers bypassing the merchant and going directly to the bank, the burden of proof is often on the retailer to determine if a claim is valid or not. Without substantial evidence, the chargeback is usually inevitable.
Verified Digital ID
Employing a verified digital ID would silence the majority of the chargeback claims—fraudulent or otherwise—and put a stop to a failed delivery, except, of course, in positively unavoidable cases. Phishing fraud is also nullified with a biometric ID, with bad actors utterly powerless to employ the payment methods without sharing the biometrics of the owner.
The method would work akin to any other app we use in our day-to-day lives, likely by harnessing a technology already deeply ingrained in our society: Global position systems (GPS). The problem is, however, GPS is somewhat exploitable—not only via companies hawking our personal information off to the highest bidder but by hackers looking to abuse us financially.
Instead, decentralized solutions may hold the answer. Some blockchain-based startups employ a decentralized network of devices to collect and validate geographic information while encrypting user information to keep it private. In this way, they circumvent exploits in conventional GPS while still collating accurate geospatial data.
For retailers, logistics services, and people alike, a biometrically verified, funded digital ID not only solves the last mile delivery problem but privacy and fraud issues as well.
(Alastair Johnson is Founder and CEO of Nuggets, a UK headquartered self-sovereign payments and ID platform that is redefining online security and privacy.)
