Negative experiences are seldom known to bear the right fruit, but when they do, that aha moment is priceless. For Jethro O’Brien, chief executive and co-founder of TradeSafe.co.za, that light-bulb moment came after he was duped while trying to buy car parts that had been advertised online.
And his idea for TradeSafe was born.
TradeSafe is a licensed, independent fin-tech company that safeguards a buyer’s funds in trust – also known as escrow – until the seller delivers what was promised. Only once the buyer is happy with the goods or services received, does TradeSafe releases the funds.
O’Brien explains: “We act as a buffer between a buyer and a seller. The funds are deposited with TradeSafe, in full, while the two parties perform the transaction. Our system is totally transparent and payments are tracked and visible to all parties. Amounts have ranged from a few hundred rand to a few million.”
The word escrow, O’Brien says, presented a challenge when launching TradeSafe as many people did not know what it meant. “Simply put, we hold the buyer’s funds in trust. If the buyer does not have the funds, the transaction will not start, and if the seller does not deliver what was contracted, he or she will not get paid. TradeSafe does not get involved in delivery. It waits for the go-ahead from each party before releasing the funds.”
O’Brien, who spent eight years in the forensic audit division of KPMG, gained knowledge and experience while working on fraud investigations and identifying fraud risk, which aided him to derive a robust escrow methodology. After KPMG, O’Brien spent three years with the mergers & acquisitions division of Ernst & Young.
Alongside O’Brien the business was founded by Bruce Harrod, Gavin Gamsu, Gavin Dace and, with O’Brien being the only co-founder running the business full-time.
“We all had one thing in common, and that was we had grown tired of the systemic rot that had encroached South Africa’s commerce sectors,” says O’Brien. “There is an increasing lack of trust and confidence when doing business with one another in this country.”
TradeSafe is a gold member of AlphaCode, a club for next-generation financial services entrepreneurs powered by Rand Merchant Investment Holdings. Dominique Collett, senior investment executive at Rand Merchant Investments, says: “TradeSafe is an exciting business because it supports the growing trend of securing online payments and enabling consumers and businesses to be more confident transacting in the digital economy. TradeSafe has ensured the solution complies with all the relevant payment standards and protocols.”
TradeSafe uses an application programme interface (API) that allows almost any business or individual to easily plug into TradeSafe’s escrow platform.
TradeSafe finalised its API two months before global leader escrow.com released its own API. The company is also authorised as a third-party payment provider with the Payment Association of SA.
Electronic funds transfer (EFT) is TradeSafe’s primary payment method. To automate the process, TradeSafe partnered with Callpay’s EFTSecure to provide instant EFT capability. “The escrow market demands automation, compliance and trust,” says JP van der Spuy, the chief executive and co-founder of Callpay. “TradeSafe is first to market with its API and Callpay is proud to work with TradeSafe to bring payment security to all South Africans.”
TradeSafe supports cross-border transactions between South Africa and other African countries, as well as international transactions. “Our negotiations with the South African Reserve Bank are nearing completion. We will shortly be an accredited international third-party payment provider, and the first fin-tech start-up to offer this service in Africa,” explains O’Brien. “Our foreign exchange partner is Gapex, which will allow us to support transactions in more than 24 currencies.”
TradeSafe’s calculates its fees as a percentage of the trade amount and can be paid by either the buyer, the seller, the agent or split equally between all parties. “Our fees start at 1.5 percent and reduce proportionately the larger the transaction amount becomes. Our minimum fee is R100,” he says. The API carries a flat charge of 1.5 percent per transaction and the minimum fee falls away.
TradeSafe can also be used for transactions that do not involve the exchanging of physical products such as accommodation bookings, much like Airbnb, where upfront payment is required to secure a booking but funds are only released at the time of travel to the accommodation provider upon checking in. The platform also allows for progress or
milestone payments for projects or bookings that are phased.