Online retailer's bold move reaps rewards

Peter Harvey, Founder and MD of PayGate. (Picture: Supplied)
Peter Harvey, Founder and MD of PayGate. (Picture: Supplied)
Supplied

Cape Town - It took online outdoor products retailer iWarehouse.co.za three years to come around to the idea of accepting credit cards on its website - but, says owner John Guthrie, “It turned my business around. I should have done it from the beginning.”

Guthrie was wary of accepting credit cards when iWarehouse.co.za opened its virtual doors in 2008 for several reasons: “We operate on very tight margins and we were afraid the credit card fees would eat too heavily into our margins. We were also very afraid of fraudulent transactions and bank clawbacks.”

For three years iWarehouse.co.za operated purely on an EFT basis, until increasing customer pressure forced Guthrie to find a credit card solution.

His homework eventually led him to PayGate: “They were the most cost effective payment service provider, but what sealed the deal for me was their service by way of their responsiveness and the ease of dealing with their support staff. Their technical support and backup systems are great.”

The effect on his business was instantaneous, says Guthrie: “We just about doubled our turnover within a month or two. I hadn’t realised how many sales I was losing – customers feel much more secure paying with their credit cards, and it’s much easier for them.”

Guthrie’s fear of fraud and clawbacks proved unfounded: “We thought we would be at the mercy of the banks, but to this day we haven’t had one clawback due to fraud. Partly that’s because we’ve been very vigilant, but PayGate also has great systems in place. Our guys are well trained and pick up most fraud attempts, but PayGate’s Pay Protector service catches what we miss.”

This is despite the fact that many of the products on sale at iWarehouse.co.za are high-value, high-demand items and tempting targets for fraudsters as they are easily resellable.

“With GPS and other high value goods we receive several fraudulent orders daily,” says Guthrie. “But with good systems in place it’s not a problem.” 



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