The manufacture and sale of counterfeit products represent a significant challenge for many businesses and industries. From fashion to pharmaceuticals, the market for counterfeit goods is thriving and is expected to form a trillion-dollar industry in its own right by 2022. According to research from Incopro, 66% of consumers who unwittingly purchase counterfeit goods are less likely to buy from the original brand again, citing a loss of trust. A further 34% will hesitate to purchase products even from the brand’s official website if their products have been susceptible to counterfeiting elsewhere. These figures illustrate how important it is for brands to protect their intellectual property and reputations by taking an active role in combatting counterfeiting.
Digital tagging provides businesses with a seamless solution for authenticating purchases at the point of sale and, perhaps more importantly, providing a digital certificate of authenticity that can follow their genuine products through the second-hand market. But this technology is more than just digital authentication and proof of sale; it’s also an important reputation management tool.
What is digital tagging?
Digital tagging utilises blockchain technology, the same technology underpinning cryptocurrencies, to provide a tracking and authentication system that businesses and consumers can trust. When customers purchase a product, their purchase is recorded on the blockchain, and a digital token is created. These digital tokens are NFTs or non-fungible tokens. A digital certificate of authenticity isn’t much use if anyone can simply copy it; how would you ever know whether you were looking at the original certificate or not? NFTs are unique and can’t be copied in the same way most digital files can.
If the customer decides they want to sell the product later, they can transfer the NFT to the new owner and verify that they are selling a genuine non-counterfeit item. Brands concerned about the impact of counterfeiting on their reputation can advise their customers to only purchase their goods if the associated NFT is included. Ultimately, the goal is to make authentication the norm and ensure customers have an easy way of verifying whether the goods they are purchasing are genuine. Consumers will benefit from being able to distinguish between genuine and counterfeit products, while brands will show their customers that they take counterfeiting seriously.
How can businesses implement digital tagging?
Having access to technology like digital tagging is one thing, but it’s just going to cause confusion without the right implementation. There are few retailers who relish the thought of having to explain to their customers how NFTs and blockchain technologies work. Like any piece of technology, mainstream success depends on making it accessible and user-friendly. If digital tagging comes at the expense of a seamless customer experience, it will greatly diminish the benefits, and businesses risk splitting their customer base in two. If half their customers are wary of the authentication system and don’t engage with it, there’s a good chance that genuine products will end up being labelled as counterfeits because original buyers don’t transfer the NFTs when they sell the products second hand.
The simplest implementation of digital tagging sees customers issues with an NFT automatically at the point of sale, whether online or in store. It, therefore, seems natural to integrate digital tagging with payment processing. That’s why MultiPay Global Solutions has partnered with Luxochain. Luxochain is a Swiss company providing the kind of digital tagging service outlined above. With the Luxochain app, customers can receive, store, and transfer NFTs associated with their purchases to prove their authenticity. Combining this technology with our unique API that allows businesses to collect payments anywhere enables consumers to take advantage of Luxochain’s robust digital authentication system without having to get bogged down in the technical details.
As Incopro’s research shows, consumers hate being duped by counterfeit products and will hold businesses responsible if they don’t think they’re doing enough to combat counterfeiters. Ensuring product authenticity in the digital age has presented a significant challenge for at least 20 years. The slew of counterfeit products mixed in with genuine products sold through Amazon is an ongoing scandal without an end in sight. By integrating blockchain-based digital tagging with payment processing technology, brands can protect their consumers and their reputations from the harm that counterfeit products cause.
