Drones, deliveries and fighting fraud
The rise of eCommerce has helped to increase the value of the global delivery market to $350 billion – a sign of the growing role that delivery plays in the retail economy. Meanwhile, the global drone market is expected to be worth more than $11.2 billion by 2020.
As drone popularity and technology advance, large multinationals such as Amazon, UPS and Google are already looking to drones to help with deliveries and cut time and cost - especially in booming Asian megacities where they could also reduce traffic congestion and harmful emissions. Ground-based robots have already begun delivering packages on a small scale. In the US alone the development of the drone delivery industry has boomed: from a $40 million market in 2012 to a $1 billion market in 2017.
We've developed Drone Pay, a proof of concept which not only delivers online packages - but checks the recipient is who they say they are - both reducing fraud and processing payment in a smooth action.
Worldpay’s Drone Pay proof-of-concept uses EMV contactless payment card technology to verify the identity of the recipient, ensuring a parcel is delivered to the right person at the right address. This technology is embedded into a drone landing pad. When the drone lands to drop off the package, the card details stored within the pad are read automatically. If the information matches that of the correct recipient, the parcel is released.
In short, the Drone Pay proof of concept functions as follows:
1. The parcel is scanned by the distribution centre before it is attached to the drone. This defines the destination and sets up the association with the intended recipient.
2. Address confirmation - this is for the sender. When everything is ready, the drone can begin its journey to the recipient.
3. For our proof of concept, we have included an 'in-flight' animation. Any potential real-world application may differ slightly.
4. The package is released once payment has been authorised and matched with the verified recipient.
5. The release mechanism is been triggered and the drone can return to the sender.
Unfortunately a natural consequence of increases in eCommerce is the rise of parcel fraud. In the U.S. so-called friendly fraud is the main type. At the current rate, it will cost merchants upwards of $25 billion a year by 2020 if no solution is found.
We believe that drones could provide an answer which prevents delivery fraud and increases convenience for consumers. Our innovation team have built a proof of concept to demonstrate the viability of a delivery drone releasing payment once identity is checked.
"Drones have the potential to really increase last-mile efficiency, which represents up to 50% of delivery cost for retailers," says Maria Prados, VP Global Retail,
"Although we do not expect mass adoption within the next couple of years, major companies are already getting serious with drones - because they can then deliver anywhere and delivery within minutes is every shopper's dream! Also, the potential to reduce parcel fraud, as with our proof of concept, is huge as the drone uses EMV contactless payment card technology to verify the identity of the recipient."
By 2024, 80% of all deliveries will be made by autonomous craft. The drone delivery industry in the US alone has grown from a $40 million industry in 2012 to $1 billion in 2017.
Drone Pay is facility that allows packages to be delivered and or returned via drone, and also allows for electronic payment on delivery. Though not a product, our proof of concept defines 'the art of the possible' when it comes to using emerging technology for delivery fulfilment.
Drone and Internet of Things (IoT) technology could be used to create a facility that could:
- Deliver a package to a consumer or collect a return at a place convenient to them,
- Allow the consumer to check the product is what they ordered and expected, before confirming receipt of the package
- Verify their age before taking receipt of an age-restricted package,
- Reduce the amount of ‘lost’ or undelivered packages taking place every day and thus reduce parcel fraud.
In parallel to our proof of concept, we undertook research in 10 markets to understand consumer expectations and attitudes towards receiving and/or returning packages via robots and drones.
52% of Singaporean consumers were comfortable with the notion of having a drone deliver purchases to their house, compared to 39% in the UK.
As mega-retail brands continue to push development in this area - and as we continue to advance the ways the world pays, you could be seeing secure drone payments much sooner than you could have imagined! What do you think? Let us know in the comments and look out for further content on Drone Pay as well as our future innovations.
About the data
The research was conducted by research house Opinium in June 2017 and interviewed 20,000 consumers who have heard about the Internet of Things in Australia, Brazil, China, Germany, The Netherlands, Singapore, Spain, Sweden, United States of America and United Kingdom. In the UK, the study interviewed 2,006 consumers.
About Drone Pay
Drone Pay is a prototype technology developed by Worldpay’s innovation team to understand how payment technology can be used to create more secure delivery and fulfilment for online retailers. The proof of concept uses EMV contactless payment card technology to authenticate the identity of the recipient. The technology is drone agnostic, and simply clips onto the drone model. The original drone remains unaltered.
Worldpay, Inc. (NYSE: WP) is a leading payments provider with unique capability to power global integrated omni-commerce, any payment, anywhere. With industry-leading scale and an unmatched integrated technology platform, Worldpay offers clients a comprehensive suite of products and services globally, delivered through a single provider.
Annually, Worldpay processes over 40 billion transactions through more than 300 payment types across 146 countries and 126 currencies. The company’s growth strategy includes expanding into high-growth markets, verticals and customer segments, including global eCommerce, Integrated Payments and B2B.
Worldpay, Inc. was formed in 2018 through the combination of the No. 1 merchant acquirers in the U.S. and the U.K., Vantiv, Inc. and Worldpay Group plc. Worldpay, Inc. trades on the NYSE as “WP”.
Emily Lahey, PR Director
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