German fintech Walbing has chosen a tracking device called the Smart Label to form the basis of a new supply-chain trading solution that aims to provide an alternative to manual paper-based payment processes such as letters of credit (L/Cs) in international trade.

The 2mm thin Smart Label developed by internet of things (IoT) hardware firm SODAQ, enterprise IoT provider Pod Group, and system integrator Lufthansa Industry Solutions (LHIND), tracks shipments large and small and is easily incorporated in packaging.

Banks replaced by IoT

Walbing is pressing the case for using IoT in international trade instead of L/Cs, which it says are labour intensive and expensive.

The Hamburg-based fintech says its Track & Pay solution, which utilises the Smart Label, is different. Payments are based on the location and condition of goods and "trusted partners are no longer banks, but more reliable IoT trackers."

5G connectivity

The Smart Label uses sophisticated 5G connectivity to send data regarding device location and temperature back to a centralised dashboard, enabling logistics companies to track valuable goods which could be as small and light as an envelope containing important documents or as large as a full-sized oil painting.

Technology provided by LHIND enables notifications to alert the user when the package enters or leaves key points along the supply chain.

How it works

Walbing is touting its Track & Pay service as a cheaper, faster and easier "digital alternative to the L/C driven by IoT technology" that frees buyers and suppliers from bank approval processes.

To initiate the service, an importer would register itself and its supplier for Track & Pay. They would then mutually confirm an order and payment schedule depending on shipment conditions.

Escrow or surety options

The importer would transfer the equivalent value of the goods to Walbing's escrow account or choose the surety option.The supplier would then send the goods together with trackers delivered by LHIND and partners. Depending on the location and condition of the goods, the money in the escrow account would be paid to the supplier's account.

Walbing's product overview of its Track & Pay system can be found here.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.