Proving the Business Case for the Internet of Things

Worldpay investigates drone deliveries

Steve Rogerson
August 7, 2018

Researchers at payment processing company Worldpay are investigating the use of drone technology in Australia to help combat the growing issue of parcel fraud. The payments provider has unveiled a prototype design that could help pave the way for drone delivery around the world.
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, which is issued to the customer in the form of a doormat. When the drone lands to drop off the package, the card details stored within the doormat are read automatically. If the information matches that of the correct recipient, the parcel is released.
The growing popularity of online shopping has helped move the value of the Australian parcel market to $9bn, and this number is set to explode following the recent launch of Amazon Prime. However, a natural consequence of this growth has been the rise in delivery complaints, which topped 1.1 million last year.
Worldpay's prototype demonstrates how drone technology could help retailers provide a better last-kilometre experience by offering a more reliable proof of delivery. Recent research by the payments company suggests that Australian consumers are ready for drone delivery to become a reality, as public perception towards the concept becomes increasingly positive.
A survey of 2000 consumers found that Australia has reached a tipping point for drone delivery adoption, with 42% ready to embrace delivery by drones, compared with 30% hanging back.
For consumers, drone delivery could offer far greater convenience when shopping online. Shoppers can choose to have a package delivered to a location convenient to them, and also have the opportunity to check the item before accepting it. For merchants, the proof of concept could help reduce delivery complaints, which cost companies unnecessary time, money and lost custom every day.
"Drones are already proving invaluable to certain industries, from search and rescue, to environmental research, so there is undoubtedly a huge potential market for delivery too,” said Phil Pomford, general manager for Asia Pacific at Worldpay. “Our data suggest that consumers are becoming increasingly open to the notion of drone delivery. Nevertheless, there are still several logistical hurdles that need to be addressed before it becomes commonplace. The weight of the package and flying distance both remain potential barriers to adoption, in addition to ensuring that parcels are delivered to the correct customer.
“This is where payment technology can help. By verifying the identity of the recipient before releasing the parcel, our proof of concept is an example of how technology can address the common problems that many Australians experience with parcel delivery. The volume of packages in transit is projected to reach one billion by 2021, as online increasingly becomes the channel of choice for Australian shoppers. Merchants should therefore explore new ways of innovating their supply chain capabilities, to keep pace with demand."
The research was compiled in partnership with Opinium, which interviewed over 20,000 consumers about their opinion on the IoT and drones. Research was conducted in ten markets – Australia, Brazil, China, Germany, Netherlands, Spain, Sweden, Singapore, UK and USA. In Australia, the study interviewed 2006 consumers.
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, while adding an additional layer of buy authentication. 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.