TradeSafe is a simple answer to a complex problem, acting as a trusted third party in trades between parties in South Africa. The company runs an independent online escrow platform that provides financial protection by securely safeguarding funds and documentation until both parties are satisfied that the terms of the transaction have been met.
The business was founded by Bruce Harrod, Gavin Gamsu, Gavin Dace and Jethro O’Brien, the latter 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.”
This was made clear in a personal transaction where O’Brien paid for vehicle parts that were never supplied.
“Although I surprisingly received my money back, it was an unpleasant experience and it got me thinking about the thousands of ordinary South Africans that were being screwed out of their honestly-earned money,” says O’Brien.
“TradeSafe has become a key buffer between the buyer and the seller, as the funds are deposited in the middle, in full, whilst the two parties perform their transactional duties. We are proud to have made transactions much safer for all parties involved.”
While the business has kicked off in South Africa, O’Brien says it is looking at opportunities on the rest of the continent.
“We believe that a cross-border escrow solution is warranted, especially with the recent credit downgrade. South Africa’s credibility has been hit hard. There exists an attrition of trust and many multinationals are scrutinising the payment mechanism when doing business with South Africa,” says O’Brien.
He adds that companies in South Africa are that are trading across Africa face a similar challenge in the risk of non-payment, and TradeSafe could play a role in bolstering trust for companies conducting intra-African trade.
“We can facilitate escrow services for cross-border trade in Africa in certain currencies. We can also facilitate international trade in major currencies around the world namely the USD, Euro, Sterling, RMB, AUD, and twenty other major foreign currencies,” explains O’Brien.
“However, a pain point is complying with the Reserve Bank’s Balance of Payments reporting standards as TradeSafe is not an importer/exporter.”
This means that additional documentation must be submitted to the SARB, which places an undesirable administration burden TradeSafe clients. This has proven to be a deal breaker, especially if the transaction is a small once-off export.
“Fortunately, we are currently in discussions with the SARB to become an accredited international third-party payment provider. Once approved, we will be able to provide international escrow services in a more efficient, ease-of-use manner which will be a massive game changer for us,” says O’Brien.
No new business is established without some surprises, and for TradeSafe one of these came in the form of language use.
“The word escrow itself was a nightmare,” says O’Brien.
“As it is an American term, a lot of people here did not know what escrow was. It has several English variations here in South Africa, such as ‘trust account’ and ‘clearing account’.”
He continues, “Now if the public didn’t know what escrow was, you could bet that the guys overseeing legislation didn’t know either. So we began the process of navigating South Africa’s complex regulatory landscape to determine whether what we were planning to do, namely escrow; a term that features nowhere in law, was actually legal.”
Another challenge is one common to many fintech startups, in an industry where trust is everything, and credibility is paramount. This can lead to chicken-and-egg situations where a new business needs trust to attract customers, but also needs customers to grow trust.
“Without our user’s trust, we don’t have a business. It was difficult in the beginning to win the trust of potential clients and it has taken us more than three years to earn this trust. One tiny slip-up from us, the word gets out and we will be forced to close our doors as nobody would want to use us,” says O’Brien.
“Lastly, and I am going to get into trouble with this, leading a team of software developers [is challenging],” he adds.
“I’m sure all non-tech entrepreneurs can attest to a bumpy road they have experienced with their dev team when things first start out. My advice is to solidify this relationship quickly - iron out communication channels, turnaround times, specification docs, conflict resolution methods and other things. A robust rapport between a non-tech entrepreneur and his software developer will make way for a powerful team which we now have.”
TradeSafe was entirely bootstrapped by its four founders, and O’Brien made massive personal sacrifices to turn the idea into reality.
“To fund the business I sold my vehicle, and my savings and provident fund was cleaned out. Making the decision to quit my job in M&A to run TradeSafe full time, at a time when the company was not even breaking even, was one of the most difficult of my life,” he says.
“Thankfully, TradeSafe is finally able to sustain a small staff, and it’s proving to be a rewarding experience.”
Now TradeSafe processes R5 million in escrow payments every month, and O’Brien says the sky's the limit.
“What we are really excited about is the roll-out of our API with three awesome marketplaces this month. One of which specialises in the agriculture sector and who already has more than 10000 registered users. Our API is pivotal in shifting our strategy from the pedantic customer to customer model to the more lucrative B2B and B2C models. Once we can secure our international third-party payment license from the Reserve Bank, and together with our API, TradeSafe will have the capability to be an unassailable leader in the African escrow payments sector,” he explains.
Proving that meeting real needs in the market will lead to ultimate success, TradeSafe overcame its teething challenges and is now a thriving business going from strength to strength as it looks to spread its reach in Africa.