Nik Mohd Azri Azaha (extreme left) with other co-founders of Prepay
Online fraud and scams are a norm in Malaysia. Around 12,481 cases reported in 2016 were related to online shopping, as per an estimate. They resulted in a total loss of RM266 (US$64) million in 2017, and this number rose to RM398 (US$95) million in 2018.
“Existing solutions to prevent online fraud deemed ineffective and inefficient,” Nik Mohd Azri Azaha tells e27. “We hope to make a difference with our online escrow service Prepay.”
Prepay — developed early this year by Azaha and his friends Muhammad Hariz Mohd Khalil, Jeck Lim, and Mohd Norhafizan Mohd Sohimi — acts as an intermediary for both the buyer and seller and regulates the transaction. To initiate a deal on Prepay, both parties have to sign up and link their accounts with online banking.
“Prepay holds payments from the buyer until he/she receives the item. We will release the payments to the seller only when both parties have agreed to the deal,” he explains. “We essentially provide an additional security layer to online transactions. We aim to eliminate scammers from the whole C2C market in Malaysia.”
Azaha’s personal experience inspired the idea of Prepay. He was buying a second-hand laptop computer from a stranger he met online.
“Just like many others, I blindly trusted the seller. I agreed to pay him RM3,900, which included the shipping fees. I logged into my account and made the payment immediately. However, I never received the item from him. Neither did I hear from him since. It was a wake-up call for me and led us to develop Prepay.”
The platform has received approval from the bank BNM to provide the service in Malaysia.
The service is not restricted to shoppers; online gamers who sell and buy in-game items or accounts can also use the Prepay service. “Anyone can use the service as long as the transaction is directly between the seller and the buyer. We hope to make online shopping safer for all Malaysians, with a focus on C2C,” he elaborates.
Prepay’s business model is simple; it charges a per-transaction service fee based on the size of the amount. (As of now there is an upper limit to the amount that can be transacted, which is RM30,000). The commission varies from one per cent to 0.8 per cent based on the size of the sum.
According to Azaha, opportunities for Prepay are unlimited. The increasing popularity of Facebook and Instagram marketplaces and C2C marketplaces like Mudah, besides the rise of e-sports in Malaysia, offers massive growth potential.
However, several challenges remain. “Online escrow service concept is quite new for Malaysians. We have to work hard to educate customers and convey its benefits.”
Like any fintech company out there in the market, Prepay is also battling trust issues. “The biggest challenge is to build brand awareness. Most people are extremely protective of their money, especially when a new platform is introduced to the market.”
Currently, Prepay is being accelerated at NEXEA.
“We are looking to raise funding which will be used to create more value to the users. At the same time, we will learn from the mistakes we committed when building our previous startup,” he concludes.
The post Once a scam victim, this entrepreneur has built an escrow service to check online shopping fraud in Malaysia appeared first on e27.