Aussie e-commerce insurance launches in SA

SafeTrade Africa yesterday launched a consumer-side insurance service for e-commerce transactions.

Acting as an intermediary for insurance giant Lloyds of London, SafeTrade will guarantee transactions on client websites for up to R12 000 and reimburse the buyer should the credit card number used in the transaction leak and be abused, or the goods not delivered.

Once approved, merchants pay a flat fee in the region of R3.90 per transaction as premium, an amount that is variable according to the level of security offered by the site. The company says it will not be affected by exchange rate fluctuations and premiums are locked into a consumer price index (CPI) linked escalation for five years.

SafeTrade Africa is a locally owned company, with a shareholding by consultancy Econometrix, but will operate under a five-year licence from SafeTrade Australia, which originated the concept.

Local MD Ian Pitman says he was looking for an e-commerce insurance product when Lloyds referred him to SafeTrade. "As they said, this market is simply too small for us to go it alone," he says.

SafeTrade happily admits that the state of e-commerce security is not as bad as consumers perceive it to be. Australian sales and marketing manager Mike Tyrrell says up to 90% of Internet shoppers have some level of concern about online safety. "In a lot of cases it is illogical, you can even term it a phobia."

Like traditional insurance, the company wants to sell peace of mind to such consumers, and believes local merchants will pay for extra business that such peace can bring. Pitman says one local gateway has already applied.

Safetrade also plans to act as distributor for a number of security-related software and service packages, with premium decreases as a deal sweetener. These include a cellular payment gateway and "virtual ATM card". The products are all linked to SafeTrade insurance and serves a second role in expanding the company's footprint among merchants.

SafeTrade Africa's licence entitles it to operator throughout Africa, a clause it intends to exercise. Pitman says a number of markets on the continent appeal to him. "We hope that we will see something come out of Africa in the near future," he says.

SafeTrade Australia describes itself as "soon to be listed". It was formed in 1999. It scrapped plans to list on the Australian stock exchange in 2000 and postponed a planned 2001 public offering.