* For Reuters LME Week coverage click on * Steinweg’s new online system could reduce insurance costs
* The system uses Near-Field Communication (NFC) chip technology
By Pratima Desai
LONDON, Nov. 1 (Reuters) – Warehousing company C. Steinweg has launched an online platform to authenticate receipts that claim physical metal using mobile phone technology to alleviate growing nervousness about duplicates.
The new system is currently available for Android phones. But a metals industry source said it would likely be available to Apple iPhone users in a few weeks.
Concerns over fraudulent receipts were rekindled earlier this year by a lawsuit filed in the High Court in London, three years after the $ 3 billion Qingdao fraud scandal in 2014, when a local Chinese company allegedly duplicated warehouse receipts to pledge several bank loans. In the three years since Qingdao, warehousing companies have sought ways to ensure that their mandates cannot be duplicated, with little success, sources said. But that could change with the latest development from Steinweg, which goes a long way towards achieving this goal.
“If it works to secure the system, make it tamper-proof, it could lower insurance costs for metal holders,” a source at a commodities trader told LME Week, an annual gathering of the metal industry in London. “People are nervous about bogus receipts again.”
Steinweg’s online system, which among other things allows customers to use the Near-Field Communication (NFC) function in their Android phones to read the NFC chip embedded in the document issued by the company.
NFC chips are used in bank cards to enable contactless payment. For metal receipts, the chip serves as a key to open the gateway to Steinweg systems and verify that the money order held by a client is genuine.
“If you have a user account for Steinweg Online, you can use your Android phone to scan the NFC chip on the DigiSec document,” Steinweg said on its website.
“If the NFC chip is recognized, Steinweg Online will display the contents of what is deposited in our records… Prior to launch, we were audited by several independent online security companies to ensure that our solution is as secure as possible.
Steinweg customers only need to download an app, which will allow them to hold the phone against an embedded warrant with an NFC chip and connect to its online system.
“It’s not something that can be developed in a matter of weeks, it must be going on from Qingdao,” a copper trade source said.
The London Metal Exchange has attempted to promote its LMEshield digital metal storage system, which registers material stored in warehouses without an exchange to guard against fraud, but adoption has been low.
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ ^ ^^^^^^^^> (Reporting by Pratima Desai; Editing by Veronica Brown and David Evans)
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