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Johannesburg - South African payments company Yoco on Thursday announced its 10 000 SMEs in South Africa using its point-of-sale payments platform to accept card payments.

The company is adding over 1 000 new SMEs to its base every month, making it the largest independent mobile point-of-sale player in South Africa by number of merchants.

By expanding access to card payments in the SME segment, Yoco is contributing to the growth of one of the most underserved segments in the economy when it comes to financial services, at a time when it is most urgently needed.

SMEs are underserved

SMEs are big business in South Africa, contributing close to 50% to GDP and driving most of employment. However, due to their small size, fragmented nature and general unpredictability, they remain overlooked by large financial institutions because it hasn’t been economically viable to reach them from a cost and risk standpoint.

SME financial services participation is limited typically to the use of a cheque or savings account by the business owners. Nowhere is this dynamic more visible than in card acceptance at the point of sale, where more than 7 out of 10 adults in the country have a card, but less than 10% of businesses can accept cards.

Enter Yoco, a South African fintech company, which started with the simple idea that all businesses should be able to accept card payments irrespective of size or maturity. Yoco CEO and co-founder Katlego Maphai said  “Many SMEs struggle to get a card payment solution from the traditional providers because the traditional offerings do not cater for small or young businesses”.

Minimum trading history, 12-24-month lock-in contracts and a sometimes-month-long application process are just some of the hurdles faced by SMEs when applying for a card machine.

“It means that they are unable to offer card payments to their customers. But how will they grow if they cannot accept card payments? To an SME, every payment matters, especially today,” said Maphai.

Lowering the barriers to entry

Yoco has focused its efforts on expanding access to card payments to all types of SMEs, regardless of size, industry and even location. Its mobile card readers can be used to accept payments both at the store and on the go, and the application process takes five minutes online, after which a courier delivers the card reader to the business owner. The card reader can be purchased upfront at R1 749 once-off or paid through easy instalments. 

“By lowering the barriers to entry, we are enabling all types of SMEs to start accepting card payments, and together with our free point-of-sale app and business intelligence portal, start tracking their sales and formalising their business to enable growth,” said Maphai.

Yoco was the last entrant into the competitive mobile point of sale space in South Africa. Yoco launched at the end of 2015, after a successful beta programme, with 500 merchants. At the end of 2016, the company announced it had acquired over 5 000 SME merchants, growing 10x in a year. Today, the company is proud to announce that it has reached the milestone of 10 000 merchants acquired. The company has doubled in size since the beginning of the year and is now adding over 1 000 new SME merchants to the platform every month. This makes Yoco the fastest growing card-payments and the largest independent mobile point-of-sale player in South Africa by number of merchants.

“This milestone is indicative of the significant demand for these kinds of services in the SME sector. Over 72% of Yoco merchants had never accepted cards before, a key metric for us at Yoco, as we look to be market makers, not just participants,” said Maphai.

Transforming the economic engine of the region

Read through any economic plan, whether published by government, academic or private sector, and you will read that a healthy SME sector is considered the cornerstone for reducing unemployment, increasing productivity in the economy and catalysing innovation. The challenging economic environment in South Africa, where consumer confidence is low, creates a context for SMEs to play a meaningful role in an economy looking to reinvent itself. Yoco fundamentally believes that SMEs are the future of commerce in South Africa and across the continent.

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Almost 80% of consumer payments in South Africa are still made in cash. By digitising payments, Yoco wants to drive the formalisation of SMEs and move into offering complimentary services driven by software, ultimately becoming the operating system for the contemporary SME.

Yoco's vision is to be the first real pan-African player servicing the untapped SME segments; plans are already in motion for future expansion. The company, has, in the past two years of operation, raised US$7 million in funding from international investors and employs over 70 people across Cape Town and Johannesburg. 

Yoco was recently selected as one of the top 250 most promising fintech companies in the world, by global research company CB Insights. It was one of only five African fintech companies that made it onto the prestigious list.

BUSINESS REPORT ONLINE