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Cape Town - South African retailers let their greed get the better of them and lost money over the festive season to criminal gangs, according to a local digital payments company.
Retailers are their own worst enemy because they don't take the simple precautions, says a representative from PayGate.
PayGate specialises in the likes of payment processing to all major South African banks for e-merchants.
"International credit card fraud does happen, but the reality is that retailers can protect themselves very effectively by taking a few simple precautions. The biggest danger is being so dazzled by the promise of quick returns that you throw common sense out of the window," said PayGate business development manager Brendon Williamson.
Common sense
"When you're importing luxury leather goods to sell in South Africa, and then most of your sales go overseas, alarm bells should ring. Why would anybody wait three weeks and pay extra shipping costs for something they could easily find in their local market? You should know that pot of gold is going to evaporate," warned Williamson.
The company says it has a PayProtector fraud protection service which checks that transactions are legitimate. But Williamson encouraged retailers to do due diligence on online transactions as experienced fraudsters viewed local businesses as easy targets.
"Another online retailer shipped an order worth R25 000 - much more than the average transaction - to an unverified address in Pretoria, even though it was bought with a Russian credit card. How much more obvious can a fraud get?" he argued.
However, rather than simply avoiding online trading because of the fraud risk, Williamson urged retailers to take a common sense approach to the internet.
"Keep your focus on serving your legitimate customers well; don’t make them jump through too many security hoops. 80% of your fraud is going to come from 20% of your customers, and those are often easy to identify."
Jump in revenue
The shopping season is a huge driver of revenue, and South African retailers did well in 2014 as online shopping made a significant impact on sales.
Online retailer, Loot.co.za had an average 62% year on year growth in a number of their general merchandise categories.
In addition, 40% of Loot's customers over the season came via mobile phones and tablets and revenue from phones jumped a whopping 300%.
"We are very happy with our festive season trading results. We wanted to tick all the boxes over this peak period, and we did," said CEO Gary Hadfield.
More South Africans are willing to go online for deals and retailers responded enthusiastically.
Currently, the retail market for consumer goods in SA is approximately R800bn, of which less than 2% is online, said online retailer takealot.
First National Bank (FNB) also saw an increased moved toward online transacting.
"As more South Africans go online, it's clear that people are also moving some of their shopping online - even for high-end goods such as smart devices and televisions," said Jolandé Duvenage, CEO of eBucks Rewards.
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