Coin Rivet: Tell us about yourself and how you came to set up Nuggets.
Alastair Johnson: The idea came about through my own experience of online payment card fraud. My card details and personal information were stolen and I went through a painful process trying to resolve the problem. Cancelling my card interrupted all the services I had linked to it, so I had to put in a lot of effort to get everything back up and running. The experience made me realise just how many locations we all have our personal information and how vulnerable shops and service providers were to breaches.
By this time, I’d been working in tech innovation for over 25 years, including several years at Microsoft with Skype. We looked at the existing technology available and found that it was lacking. We realised we needed a zero-knowledge storage solution where only the individual had access to their own personal data. We were excited by blockchain’s zero-knowledge storage, in-built encryption and the inherent privacy and security – all combined with this incredible, shared immutable ledger. We realised this could be the basis of the answer to a global payments problem.
Coin Rivet: What are the retail/e-commerce problems you’re solving?
AJ: Nuggets is solving three of the biggest problem in retail/e-commerce – fraud, false positives and chargebacks.
In terms of fraud, nearly one in ten UK adults have been defrauded via their debit or credit card in the last year. For merchants, every dollar of fraud costs them $2.94, up 6% in a year. When it comes to chargebacks, merchants and issuers combined lost around $31 billion to chargebacks in 2017, with merchants bearing around two-thirds of the losses ($19 billion).
These are big issues that the industry continues to struggle with because of the dated technology and processes it relies on. Nuggets solve these issues because it enables e-commerce payments to be made without exposing any personal information or payment data during a transaction. When a consumer makes a purchase, they verify the transaction via biometric proof of identity, confirming to both parties that the transaction is approved.
From the consumer’s point of view, we’re helping them take control of their own data and giving them protection against the threat of breaches from centralised databases. They choose which companies they want to share data with – if any at all – and are given a value in return for any data they do choose to share.
For retailers, the benefits are clear. Apart from the massive reduction in fraud, chargebacks and false positives, as well as the enormous cost savings that come with it, they get frictionless shopping experiences that increase sales and reduce abandoned carts.
Finally, it’s worth noting that they don’t have to spend lots of time and money adhering to strict data regulations such as GDPR. That’s because, by using Nuggets, they don’t hold any personal customer data.
Coin Rivet: It has been an eventful 2018 for Nuggets. One of the standout moments for me is the company being picked for the latest Lafayette Plug and Play business accelerator. Could you tell us a bit more about this? What are the other significant moments for you?
AJ: I agree that being selected for the Lafayette Plug and Play business accelerator is particularly exciting. This is the world’s leading business accelerator for the retail and e-commerce industry, and Nuggets is the only blockchain-based startup among the 17 companies chosen to take part. This gives us an important foothold in France and incredible opportunities to connect with retail giants over there. As part of the programme, we join the Plug and Play global community. Previous members of that include Dropbox, PayPal, Lending Club and SoundHound, so that’s pretty good company to be in.
There have been so many other exciting moments and business milestones. Launching both iOS and Android Alpha versions of the Nuggets platform was a great success. Being selected by the UK Financial Conduct Authority for Project Innovate allowed us to test Nuggets with consumers within the regulatory sandbox, which was really important.
We’re making partnerships with hugely important companies across the world. We’ve entered into agreements with Storiqa, a marketplace for buying and selling goods with cryptocurrencies, and QFPay, the Chinese payment provider that serves 800 million WeChat users and 400 million Alipay users. We’ve also been in talks with TenCent and the 360 Finance Group (under Qihu 360). Enthusiasm for Nuggets among businesses across Asia is huge.
And we have received the backing of the UK Department for International Trade, The Mayor of London and The City of London, as well as being selected for the prestigious Access India Programme, which is presenting exciting opportunities in a crucial market.
AJ: Kevin is the former MD of Visa UK so getting someone of his experience and expertise onboard is important for Nuggets. He helped drive the adoption of contactless payments at UK merchants, and he played a big role in Transport for London’s adoption of contactless payments, which has led to more than a billion contactless journeys to date.
Kevin has this incredible track record of establishing partnerships with financial institutions, technology partners, retailers and e-commerce providers. We’re focused on rolling out the product across the world as quickly as possible and Kevin will help us do that. He knows all about operating in regulated environments and managing governance changes, so he’ll help us get around the barriers and obstacles that pop up in this industry. All in all, he’s going to help us enhance customer payments journeys in both the physical and digital world, which is fundamentally what Nuggets is about.
As for Steve, his strategic advice has been invaluable to us for some time now as he was an early investor and strategic advisor. Getting him onboard as a non-exec director was a logical next step. Steve has 35 years’ experience in financial services and has worked across dozens of territories. As well as holding leadership level positions at companies like LV Insurance Group and RBS Insurance, he has founded and sold two of his own financial services businesses. His experience really spans the spectrum and that’s vital to us.
Coin Rivet: Blockchain has more than its fair share of critics, who label it all hype, no substance. How do you respond to that?
AJ: Of course there is a lot of hype surrounding the blockchain. It’s a similar story to the dot-com boom of the late 1990s when people around the world were dreaming up new use cases and business ideas based on the internet. A lot of these failed and the bubble burst. But among the startups of that time were companies like eBay and Amazon.
The internet has changed the world in more dramatic ways than anyone could have imagined and I have no doubt blockchain technology is going to do the same. It’s going to give everyone in the world the ability to exchange value without the help of intermediaries. In itself, this is huge. The internet has become incredibly centralised. A few players extract the lion’s share of the value of people’s data. The blockchain could change this status quo. I don’t think the world has grasped the democratising implications of the blockchain – so in many ways we could say it is underhyped.
Of course, there are problems in the blockchain and cryptocurrency industry. Many people are investing in companies that clearly don’t have a future. The key is to work out whether a company is actually solving a problem by leveraging blockchain technology.
It’s also worth noting that the web 3.0 era isn’t just about the blockchain. It’s about a number of technologies and trends coming together, from biometrics, to IOT, to AI. Blockchain-based solutions tend to leverage many different technologies and this is why we’re going to see such exciting progress. Imagine a future where you walk into a coffee shop and facial recognition identifies you, orders your usual coffee and pings you for confirmation, all before you reach the counter. Nowadays we worry about the privacy implications of this type of scenario. But imagine if the biometric information is owned by the individual, and they decide how it can be used – not the retailer.
What I am particularly excited about in terms of the potential of technologies such as biometrics and blockchain is the opportunity to spur progress and quality of life in the developing world. As a provider of trust, transparency and certainty, the blockchain can help facilitate the distribution of rights and assets in countries that lack robust administrative infrastructures and systems. When we see the potential of solutions like Nuggets realised in those markets, we will have made a huge difference to society and people.
Coin Rivet: Working with a nascent technology brings both opportunities and challenges. What are the main challenges that Nuggets has been facing?
AJ: I speak to a lot of entrepreneurs and they face challenges persuading the world to recognise the problem that they are solving. But we haven’t had that problem.. We’ve been delighted at how enthusiastic consumers and retailers are about Nuggets. Also, the front end and UX of our product is very familiar to people. The blockchain technology is in the back end. Consumers only really need to know that the blockchain keeps their data locked up and safe – but available to help them when they need it.
The challenge with a project like Nuggets is to build a network of both consumers and businesses. It’s usually a chicken and egg situation. To gain support from retailers you need a critical mass of consumer demand. To gain demand from consumers you need retailers to provide a Nuggets payment option. However, we have seen huge interest from the world’s biggest retailers from the start. The people making the decisions in these companies are online consumers like every one of us. So they feel a visceral excitement about Nuggets from a personal point of view, as well as from a business point of view.
From a product point of view, we started development years ago, and blockchain and biometric technology is obviously improving and developing fast. So we have to keep up. We started with on-device fingerprints to make verification easy for users, but we are now benefiting from new developments in device security, including facial recognition and other innovations.
From a blockchain point of view, our solution is built on the Ethereum network. To avoid undue load on the current public Ethereum network and slow speeds, we decided to host data storage aspects of the Nuggets solution in what’s known as a private sidechain that is pegged to Ethereum. As the public blockchain becomes more scalable and improved scalability options become available, Nuggets will look to adopt these. Because Nuggets has been built in an agnostic manner we are also working partner blockchains that already offer faster transaction speeds and potential to develop it.
Regulations in the payments industry are, of course, also a challenge – especially when you’re looking to roll out across the globe. But we have the team in place to deal with regulatory challenges. In fact, the nature of our solution means we don’t ever hold any private consumer data ourselves, which greatly simplifies the privacy regulations challenge.
Coin Rivet: You have been developing your reach with global partners. Could you tell us a bit more about the thinking behind that and progress thus far?
AJ: As Nuggets is going to be a global solution, developing worldwide reach as quickly as possible is important for us. Asia is a crucial market, and our company chairman, Steve Lau, has helped us to establish Nuggets China and build a team to drive growth there. He’s helped us secure agreements with QFPay, which serves 800 million WeChat users and 400 million Alipay users. We’ve also been in talks with TenCent and the 360 Finance Group. In addition, our team has been talking with former executives from Alibaba, Huawei, Xiaomi and a major Chinese telecommunications operator.
Being selected for the Access India Programme, run by the Indian High Commission in the UK in partnership with the UK India Business Council (UKIBC), has led to us doing product workshops with retail leaders in India. A number of other Indian opportunities are in the pipeline.
Our selection for the Lafayette Plug and Play business accelerator is going to lead to talks with the biggest retailers in Europe and the globe. Through this award, we’re getting access to the US through the Plug and Play Tech Center based in Silicon Valley.
Closer to home, we’re backed by the UK Department for International Trade, which is leading to important international talks and opportunities.
Coin Rivet: Where would you like Nuggets to be in a year from now?
AJ: The short answer is everywhere! Our platform is available globally. But we will keep exploring merchant and payment partnerships in multiple markets and working on building up a network effect among consumers and merchants. Once word spreads about Nuggets and all its benefits, we expect an exponential network growth effect will take place.
In a year from now, I fear the world will have experienced even more high-profile and potentially disastrous data breaches in the retail sector and beyond. So I think we’re going to see a radical shift away from centralised storage of data. Trusting third-parties with user data won’t be considered a viable option for much longer, so I feel merchants and consumers will be actively seeking solutions like ours by this time next year.
One of our biggest priorities at the moment is processing the feedback we’ve received from the Android and IOS alphas. We’re looking at what users like, what needs to be improved, and any suggestions for additional features that we can implement. The product will have undergone many tweaks by this time next year, while keeping the same super simple UX.
Finally, it’s worth mentioning the other key goals that we’ll be investigating in time, notably cross-merchant reward points and identity verification.
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.