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E-commerce in South Africa is in desperate need of improved ID authentication


South Africa’s e-commerce market has exploded and is expected to grow exponentially in the coming years. However, online retailers will need to improve not only their digital strategies but also their security measures, according to Gur Geva, co-founder and CEO of tech start-up iiDENTIFii.

South Africa is only the 41st largest e-commerce market, with $5 billion (R75 billion at the average rate of $15) in sales in 2021.

According to e-commerceDB, it is expected to grow at an annual rate of 8% between 2021 and 2025, outpacing the global average of 6%. Major global players have expressed strong interest in the South African market, most notably Amazon, which sees it as a gateway into Africa.

“We believe that shortly, the ability to conduct business online will require biometric authentication of every individual. This is not only for their protection but also for the protection of the organizations that they are conducting business with. Geva says there has been a huge rise in online fraud by dishonest customers and organized crime groups.

Digital strategy

Many big retail chains have to expand their online presence to stay competitive, and they need a sophisticated digital strategy to take on companies like Amazon. At the moment, is the largest player in the South African e-commerce market.

In 2021, the online store made $602 million in sales. It is followed by ($85 million) and ($57 million), the second and third largest stores. Estimates show that only 15% of online sales in South Africa come from the top three stores.

In South Africa, online security is still in its infancy, with very few retail chains implementing strong identity authentication measures. “A significant risk in online business is the inability to acquire adequate information about the company or individual with whom one is conducting a transaction. According to Geva, the adoption of digital identity authentication has been relatively sluggish in comparison to the exponential growth in the number of online transactions..”

The main reason for this slow adoption is that there aren’t enough rules for e-commerce verification to keep up with the growing number of transactions. Covid, which forced people to do online business, worsened things.

On the other hand, the financial industry has come a long way since enterprise-grade remote digital biometric identity authentication solutions were put in place.

This is due to stringent know-your-customer (KYC) regulations to combat identity theft, money laundering, and terrorist financing. It is only a matter of time before identity authentication in retail becomes more regulated.

Better e-commerce protection

Some businesses are already preparing for stricter regulations by actively seeking out various authentication technologies and solutions. According to iiDENTIFii, account hijackings, identity fraud, and data breaches are becoming more common.

Account hijackings, also called “account takeover fraud,” happen when fraudsters or criminals pretend to be real customers to take control of an account and then make unauthorized, fraudulent transactions. In the US alone, the number of reported cases went up by 90%, expected to cost an extra $11.4 billion in 2021 compared to 2020. About 22% of adults in the US have been scammed by account takeover fraud.

Preferred partner

Geva says that biometric face authentication is a good way for businesses to stop account takeover fraud. iiDENTIFii recently raised US$15 million (R272 million) in growth capital, which will fund the company’s growth across Africa.

As we get closer to achieving our goal of authenticating every face in Africa, we couldn’t be more thrilled to put this investment to work. Geva says, “We are still doing our best to stop identity theft in Africa,” Geva says.

The investment, led by an African company called Arise, proves the company’s main business idea: it is still the best partner in Africa for enterprise-grade identity authentication. Along with Arise, private equity firm Sanari Capital and US tech entrepreneur Bill Spruill are also investors.




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