South Africans are put off ecommerce because of “a negative perception of online transactions and online payments” because of the high amount of bank card fraud believes Njabulo Makhathini. He believes his Johannesburg-based startup Airbuy has come up with a solution to tackle this problem.
“People just fear online transactions and online payments point blank,” said Makhathini (pictured above left) who founded Airbuy in 2016 with Tshepang Kubo and Kabelo Twala.
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Makhathini who heads business development at the startup has a good reason to say so. Last year BusinessTech, quoting the South African Banking Risk Information Centre, reported that since 2010 South Africans have lost over R4-billion to bank card fraud.
Sixty percent of credit card fraud took place when a cardholder was not physically present when the transaction took place — termed as card-not-present (CNP) fraud.
“All current payment options available on the market require the consumers to have a credit card or a debit card at the least, which has proven to be very risky with the growth of CNP-related crimes,” he adds.
Airbuy he says has come up with way to tackle CNP fraud — having developed a digital token, Airbucks, which users can purchase through by EFT and thereafter use to make payments on e-commerce sites.
By enabling online retailers to accept payments without requesting customer’s banking details, the startup hopes to tackle and reduce fraudulent transactions.
Airbuy founders believe their alternative payment solution could reduce CNP fraud by taking banking details out of the equation during online transactions
The digital token can also be transferred to other users. Those that buy tokens from other users are not be able to convert the tokens back into cash — they can only spend it online.
The startup is currently working on enabling users to purchase Airbucks using mobile banking, airtime conversion and bitcoin. The startup is also looking to partner with banks and mobile network operators.
Airbuy, which has 97 registered accounts, is currently working on finalising Application Programming Interface (API) integration with 56 South African ecommerce sites.
“We are aiming to increase this number in the next six months by signing up more ecommerce platforms and gaming apps in South Africa and other African countries,” says the head of business development.
The startup aims to generate revenue by charging a commission of between 2.5% and 3% on every transaction it facilitates.
Old idea, new concept
Makhathini, Kubo and Twala initially wanted to come up with a solution to “bridge the gap between airtime subscription and online music downloads”.
The three believe that the way music is sold online in South Africa, through platforms like iTunes, is “not realistic in an African context”. Instead, Airbuy’s founders looked at something many in Africa are familiar with — purchasing ringtones and music using airtime.
“It’s something South Africans are familiar with and has been active in the country for more than 20 years,” says Makhathini.
He said the founders struggled to “talk to the right people” at the mobile networks and could not get the telcos on board with their idea. “That process takes years, time you don’t have as a startup,” he says.
Because of this challenge, the founders decided to pivot the startup and come up with the “lean” concept that the startup currently has.
Positive reception
Airbuy was officially launched at Demo Africa in November last year where Makhathini said the payment solution received a “great reception”.
“We made connections from Mozambique, Ghana, Nigeria, and Morocco just to name a few,” he says, adding that the startup “got a lot of business”.
The three founders also attended MIT’s Global Startups Labs in 2016, culminating in the Tshimologong-affiliated startup winning office space at the digital precinct.
Later in the same year, Airbuy came out third and walked away with R20 000 in the Fintech and Big Data Challenge organised by Stellenbosch-based business incubator Launchlab.
Read more: Nedbank, LaunchLab award R80 000 to Fintech and Big Data Challenge winners
The startup which, is one of the 10 participants of I’M IN Accelerator‘s first cohort, is currently concluding negotiations with IDF Capital for seed capital.
Read more: I’M IN Accelerator finally under way, here are the startups in the first cohort
Featured image: Airbuy founders (from left to right) head of business development Njabulo Makhathini and CEO Tshepang Kubo (Supplied)
