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USPS could bring trust to peer-to-peer e-commerce, says OIG

Tuesday, January 22nd, 2013

The US Postal Service should have more of a role facilitating the potentially lucrative peer-to-peer e-commerce market in the United States, according to a new white paper.

In particular, the paper from the Office of the Inspector General suggests that USPS could use its trusted brand to provide a central digital identity and authentication system for peer-to-peer online trading, which would bring trust to a system hindered by fears of identity fraud and of buying goods that never turn up.

The market, which includes the sale of new and used goods from consumer to consumer, such as through auction websites and marketplaces such as eBay, Etsy and Craigslist, is expected to grow more than 60% through 2016.

Postal services in the US are already used within the peer-to-peer market, but the OIG suggested that USPS has opportunities to grow further in the segment.

The paper suggests that a USPS digital identity and authentication service could help improve levels of trust in the peer-to-peer system, vetting sellers and reassuring buyers worried about being ripped off.

USPS could also provide digital payment options including a collect on delivery system that would mean buyers no longer fearing paying for an item that never turns up. The Postal Service could act as an intermediary, holding payment for an item until the buyer accepts the purchased item, or else take payment on delivery, transmitting funds directly to the seller electronically.

The OIG said if USPS provides payment services, it would be able to charge a commission, earning an income from peer-to-peer sales that may not even need shipping – such as apartment rentals and services. Equivalent services like PayPal charge commissions from 1% to as high as 10% on sales.

USPS could also offer insurance for purchased items, the paper suggested.

“A digital identity service and other postal services for┬áthe peer-to-peer market would help solidify the Postal Service’s role as a hub within the community for facilitating commerce in this important new marketplace,” said the OIG paper.

Confidence

The little information available about peer-to-peer e-commerce suggests that as much as 1% of online revenue in the segment is lost to fraud. If that was applied to the whole US e-commerce market, estimated to be $200bn in size in 2011, that would represent a $2bn loss, OIG said.

“Some buyers and sellers choose not to engage in P2P commerce with an unknown or emerging facilitator, because they do not consider the trust framework to be sufficiently reliable,” said the paper. “This lack of confidence and trust can limit potential new businesses and applications.”

The report suggests that peer-to-peer e-commerce sites are turning to the likes of Facebook to vet identity, but although Facebook supposedly bans people from falsifying information, “there is little infrastructure in place preventing people from adopting a number of aliases”.

“With its reputation as the most trusted federal government agency and its long history of protecting the privacy of First Class Mail, the Postal Service could lead the way in bringing privacy and real-world validity to digital identity,” said the white paper.

A peer-to-peer seller would be able to display a “postal trustmark” after being vetted by a USPS verification service, enhancing that seller’s reputation.

Sellers with better online reputations can achieve better sales, the report suggested. “The importance of reputation capital cannot be minimized: it acts as a secondary currency.”

The US Postal Service is investigating various options for digital services to enhance its existing mail and shipping business, through the new Digital Solutions unit headed up by Paul Vogel.

The Digital Solutions unit is already developing a pilot programme to provide an identity authentication system for citizens to access government services online.

Source: Post&Parcel/OIG

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Direct Link specialises in international cross border distribution and returns of e-commerce packages worldwide. Parent company PostNord (the merged Swedish and Danish Post Offices) supports Direct Link with IT expertise, postal connections and international logistics solutions, across the Nordic countries and intercontinentally.

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