As the global digital economy grows, and consumers buy more items from their mobile and other web-connected devices, a problem grows along with that. We are talking about the rise of counterfeit goods.
But where there are problems lie opportunities – and that’s the story with a company called TruTag Technologies.
The company makes barcodes that are edible and microscopic – specifically, they are made from nano-porous silica – which can be used to ensure the authentication of a host of products ranging from medicines to food to vaping pods to cannabis. Now, the company reportedly has raised $7.5 million in a funding round that was led by Pangaea Ventures and Happiness Capital.
According to that report, “TruTags are used with hyperspectral imaging technology, which is able to process much more wavelengths than other imaging methods, so it can collect more precise and detailed data from an image. When scanned, the barcodes provide information about where a product was manufactured, lot numbers, authorized distributors and safe use.”
TruTag offered no immediate comment, but news of the funding round comes not only amid an ongoing push to enable more online pharmaceutical sales and delivery, but also an increasing focus on the global problem of counterfeit goods.
Just take the online marketplace industry as one example of that problem. According to recent PYMNTS research, illicit and counterfeit goods make up a multibillion-dollar fraud industry, with merchants suffering $323 billion in total losses from counterfeit products in 2017. Online sales of such products are projected to reach $1.8 trillion by 2020, presenting a problem for third-party marketplaces that allow individual sellers onto their platforms. These sites not only need to be vigilant against payments-related fraud, but must also have the right tools in place to detect illicit listings.
Not only that, but in a report from earlier this year, the Organisation for Economic Cooperation and Development (OECD) found that trading of pirated and counterfeit goods has risen significantly. The increase has the effect of stifling a global economy driven by innovation and new ideas. The value of fake and counterfeit products went from $461 billion in 2013 to $509 billion in 2016. That’s an increase of 3.3 percent, up from 2.5 percent in 2013.
“Illicit trade in fake goods is a major challenge in an innovation-driven global economy. It has a negative impact on the sales and profits of affected firms, as well as broader adverse effects on the economy as well as public health, safety and security,” said Christian Archambeau, executive director at the European Union Intellectual Property Office.
The most commonly counterfeited items are shoes, makeup and children’s toys, but they also include phones and accessories, clothes and watches. Because they’re not regulated, the items can pose health and safety risks for consumers, particularly for food and medical items. In fact, medical items and pharmaceuticals are typically the most-seized products.
The country that manufactures the most fake goods is China, although India, Malaysia, Pakistan and Turkey are also in the mix, the agency found. Turkey, in particular, seems to be making fake leather, food and makeup and exporting those counterfeit goods to the EU.
As all that happens, barcodes themselves are getting more sophisticated, and in ways that differ from the TruTag approach.
For instance, InComm, a global prepaid product and payment technology company, has worked with Welcia, Japan’s leading pharmacy chain, to launch four mobile barcode payment solutions in its stores. InComm integrates its point-of-sale payment technology directly with Welcia.
“Simultaneously connecting these major mobile barcode payments with the largest pharmacy chain in Japan is an exciting opportunity for InComm and Welcia’s customers,” Takumaro Arai, vice president and general manager of InComm Japan, said in a press release. “This partnership demonstrates our flexibility to work with Japanese and other international barcode payment providers while meeting an important consumer need in our region.”
Expect more such innovations as an increasing number of consumers turn to the digital realm for their daily needs.