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.