Could an SMS purchasing startup help stop online fraud?

Any online retailer will tell you in no uncertain terms that fraud, specifically by using credit cards online, is a huge challenge for them and their competitors. Not only are these retailers often liable for the chargebacks caused by fraud, but it creates a negative impact on the online buying industry as a whole.

Over the festive break, a number of people have sent emails asking about making online transactions via other means — in other words not using credit cards. They asked: Can we make payments from our bank accounts directly? Can we buy with our mobile phone accounts?

Those two questions are very different things. Buying straight from your bank account is like doing and electronic funds transfer (EFT) or a debit order, both which require manual effort each time. Also, EFT payments are already offered by companies such as PayFast.

SMS payments are less used online, although they almost totally cut out fraud. I still have not heard of one case of fraud from websites using SMS purchasing. However, as with websites like Bid4Africa.com, you can only charge so much to a person’s mobile phone bill. In its case, it is R10 per SMS, and I think the limit is R30.

And Bid4Africa is growing fast, wth users commenting on the ease of using the website on their phones, which was a strategy of the website business from the start. Most of their traffic is now from smartphones, and all their purchasing is via SMS. This also means that their website’s full functionality is available to users anywhere and at anytime.

What would be wonderful is the combination of both bank account and SMS/mobile phone purchasing. If FNB was not just a bank, but was also a cellphone network operator, they could make this sort of transaction very easy and safe. Likewise, if CellC opened up as a banking division as well, you could simply pay with your phone, and the money would come off your bank account.

So that is what companies like ChingPayments are trying to do. ChingPayments allows you to manually and securely link your phone number and bank account, and thereafter make and receive payments with their phones to anyone who is also on the Ching network, straight into their bank accounts. Many people are looking forward to the launching of this cardless payment mechanism, which, by the way, would work for online websites very efficiently and curb most fraud.

Every year since 2010, people have been heard saying: “This is the year of the mobile,” and every single year it doesn’t feel like it was definitely that “year” they are speaking of. We now have a good number of smartphones in South Africa. We browse, we use apps, we use email, connect, chat and do most of our basic daily duties on mobiles and tablets. If services launch that make payments become commonplace on mobiles, then it could finally be the year of the mobile.