Escrow Services In South Africa
If you’ve ever tried to buy or sell something through the classifieds, you’ll know that the process is fraught with fraud and worse, potential danger. In the old days it was the classifieds in the newspaper, today it’s websites like OLX or Gumtree.
I recently did a spring clean and have been trying to sell a bunch of things I no longer need. I advertised them on OLX and Gumtree and can confidently say it has been a most unpleasant experience trying to sell them. So much so, in fact, that I am tempted to rather throw away the smaller items than have to deal with this admin and stress.
Challenges Of Transacting
There are so many people trying to rip you off. I’m very aware and not desperate so if I detect anything suspicious I just tell them the item has been sold and they leave me alone. But even legitimate transactions require one of the parties to take on a degree of risk. This is applies especially when it is a large amount of money that needs to be transferred or the seller and buyer are in different cities. There was a camera lens that I wanted but the seller was in Pretoria and there was no way I would deposit the money before receiving the lens and she was not keen to send the lens before receiving payment. I’m sure this sort of stalemate prevents many transactions from taking place.
I recall being introduced to a service called, This Is Me, which aims to verify a person’s identity online. But it’s not that I don’t believe the person is who they say they are, I just don’t know if they are honest or not. Because really, let’s be frank, if they don’t send me the item after I have paid for it, what can I do? Even if I know who they are and have their address, etc., what options do I have? Call the police? I don’t think so.
I believe the only solution is cheap, trustworthy and simple escrow services. Escrow services have been used to facilitate transactions between parties since the dawn of time. And we are already using types of escrow services, for example AirBnB. Apart from linking accommodation providers with accommodation seekers, AirBnB looks after the transaction so that both parties know they are protected in the event that there is a problem with the transaction. I’ve had 3 separate sets of friends get ripped off because the booked and paid for accommodation in Cape Town through advertisements they found in classifieds, only to find when they arrived that the accommodation did not even exist. Websites like AirBnB prevent that from happening and you know you will get your money back if there is a problem.
I also found another escrow service, called TradeSafe. This is an independent service which any 2 parties can use to facilitate a transaction. The fees are much lower, starting at 1.5% and reducing depending on the size of the transaction. The minimum fee is R100. But this service does not get involved in the delivery of the item, the parties must arrange everything themselves. TradeSafe simply waits for the go-ahead from each party and then it releases the funds. This means TradeSafe can be used for transactions that do not involve physical product. For instance, if you wanted to book accommodation, and they wanted you to pay the full amount up front, you could place it in escrow with TradeSafe and when you check in and are happy you release the funds.