SA fintech startup Yoco expands offering with cash advance service

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South African fintech startup Yoco, which has achieved notable success with its point of sale (PoS) payment service, has expanded its offering with the launch of Yoco Capital, which provides small businesses with fast, efficient access to cash advances.

Yoco builds tools and services to help small businesses accept card payments and manage their day to day activities. Since launching its first product in late 2015, a card reader that connects with a merchant’s smartphone or tablet, the company has grown its base to over 28,000 South African small businesses.

Disrupt Africa reported last month the startup raised a US$16 million Series B round, led by Partech and including the likes of Orange Digital Ventures and FMO, to scale its operations, and it has already begun this process by launching Yoco Capital.

With access to finance having been identified as a major challenge for small businesses, Yoco Capital allows them to access cash advances in a simple and efficient way. Over a three month trial, the service granted 225 advances to the value of ZAR7.5 million (US$509,000), with the size of the advance determined by the merchant’s monthly turnover.

The product has now moved out of beta, offering eligible Yoco merchants advancing of between ZAR2,500 (US$170) and ZAR75,000 (US$5,000). To secure an advance, a merchant simply logs in to their Yoco Business Portal to see if they have an offer, and applies in a few clicks. If successful, approval is provided within seconds and funds are transferred into a merchant’s bank account within 24 hours.

“This offers entrepreneurs a simple and transparent way to fund growth, while ensuring that their assets are not tied up in their business,” said Yoco co-founder and chief executive officer (CEO) Katlego Maphai.

While traditional business loans charge an interest rate attached to a specific repayment period, Yoco Capital charges one transparent fixed fee, which customers know in advance. There are no early repayment fees, no late fees, and no hidden costs, with customers simply paying back a small portion of the cash advance with each swipe they process through their Yoco card machine. Deductions are automatic and calculated based on a fixed percentage of every card transaction that is processed, until the balance is paid off.

“This means that when business is good, customers pay their cash advance off more quickly, and when business is slow, they are not burdened by hefty month-end debit orders in service of their capital. As the concept allows businesses to repay as they get paid, there is minimal impact on cash flow,” adds Bradley Wattrus, Yoco co-founder and chief financial officer (CFO).

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Passionate about the vibrant tech startups scene in Africa, Tom can usually be found sniffing out the continent's most exciting new companies and entrepreneurs, funding rounds and any other developments within the growing ecosystem.

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