It has been quite a 2017 so far for South African payments startup Yoco, which says a “customer centric” approach is key to success.
Launched in 2015, Yoco enables SMEs to accept card payments and provides card readers, and free point-of-sale and business intelligence tools to more than 10,000 South African small businesses, a landmark it reached last month.
In March, the startup concluded a Series-A funding round from the United States (US)-based Quona Capital and Velocity Capital from the Netherlands. In an interview with Disrupt Africa, Yoco chief executive officer (CEO) Katlego Maphai said being customer centric had kept the startup “relevant and focused”.
“Very early on we understood that we were solving an access problem, not just a cost one. Getting a card machine traditionally took too long and was almost seen as a privilege,” he said.
“With this in mind, we took a long-term view and started to build out infrastructure and a brand that would remove the traditional barriers.”
That certainly seems to have been achieved. Signing up for Yoco takes less than 10 minutes, with all the checks completed automatically in the background with no human intervention. It is available to everyone, with Maphai saying this focus on access and the technology that enabled it has allowed the venture to tap into existing demand.
“Wrapped up in a good, new brand developed with trust at the centre, you have the right ingredients for high growth,” he said.
The opportunities for Yoco were evident from day one, with South Africa having a massive payment acceptance gap.
“There are lots of cards in the market but not enough places that accept them. Millions of businesses in South Africa still struggle to accept payments in a country where seven out of ten adults have a card at all levels of the economy,” Maphai said.
“As an example of the reach, over 10 million prepaid Mastercard social grant cards are in issue. We saw a massive opportunity, and we jumped in head first.”
Maphai said Yoco was founded with the simple idea that all businesses should be able to accept card payments.
“We believe that running a small business is difficult enough; there are a plethora of challenges faced daily. Accepting money should not be one of them,” he said.
“SMEs are a fragmented group, making a significant contribution to the economy with employment and GDP on aggregate. Our platform is syndicating entrepreneurs and small business like never before. As a collective, we are giving them a voice and visibility to reach new heights.”
Investors clearly believe in the vision, with Yoco having raised a total of US$7 million in funding from local and international investors. Its growth has been significant, and Maphai says the startup is the fastest growing card payments and the largest independent mobile point of sale player in South Africa by number of merchants.
Yoco operates across the whole of South Africa, with concentration in Cape Town and Johannesburg. It services micro to medium sized businesses, in the restaurant, cafes, health and beauty and retail spaces. Further expansion is on Maphai’s mind, however.
“Groundwork for international expansion is underway, with ambitions to test markets in East and West Africa by the end of next year,” he said.
Yoco sells card readers to its merchants, and charges a percentage fee of transactions processed.
“We are on track to be in a position to be cashflow positive by 2018, we will likely choose to reinvest that for growth to solidify our position,” said Maphai.