DURBAN - DIGITAL payments platform Yoco has crossed R1 billion in monthly transaction volume five years after officially launching into the market with just 500 customers and less than R1 million in monthly transaction volume.
The business which now boasts 110 000 customers reached R1.2bn in monthly volumes for the first time in December last year.
Yoco co-founder and chief business officer Carl Wazen said on Friday that this was a faster recovery than anticipated.
“If you had come to us in April 2020, when our merchants’ transactions were down -85 percent during lockdown level 5, and told us that we would surpass the billion-rand mark in a single month before the end of the year, we would have laughed. This milestone shows that small and micro merchants are as agile and resilient as ever and will find a way to bounce back. It also shows us that demand for digital payments is stronger than ever, with fewer consumers carrying cash and more businesses going fully cashless,” said Wazen.
He said more than 50 000 new merchants had joined Yoco in 2020 despite the lockdown and economic pressures. Accepting card payments was no longer a nice to have, but a fundamental part of doing business in 2021.
Yoco’s revenue dropped by more than 90 percent in the early days of the pandemic and was now 50 percent ahead compared to pre-Covid levels and 10 times versus April 2020. The growth is said to have been driven by strong small business recovery in the back-end of 2020 although the current lockdown had softened January small medium enterprises (SME) recovery.
A second tailwind driving growth was rapid acceleration of digital payment adoption, as consumers and businesses alike ditched dirty notes and coins in the wake of the pandemic.
According to Yoco research, the number of small businesses in South Africa that were fully cashless jumped by 300 percent from March to July 2020. The business has also diversified its product offering, launching a suite of online payments products (Pay by link, virtual gift cards and integration with WooCommerce & WIX), while it continued to grow revenue through in-person payments and Yoco Capital.
The company’s future growth is focused on providing access to financial services for SMEs, where despite more than 80 percent bank account and card penetration, only 8 percent of businesses were able to accept cards in South Africa.
This gap was said to be largely concentrated in the 5.8 million small to micro-businesses that had not been the priority of traditional financial institutions.
Wazen who co-founded Yoco with four friends - Katlego Maphai, Bradley Wattrus and Lungisa Matshoba - said challenges abounded on their way to this milestone. The lockdowns effectively barred tens of thousands of their merchants from trading the way they used to.
“This was a big shock to them and to us but it forced us to get creative. We released a suite of online payment tools so that our merchants could continue to get paid during lockdown. We published the small business recovery monitor (a daily monitor of small business transactions compared to pre-Covid) so that small businesses knew how the lockdowns were affecting their peers by industry, by province etc.”
The business said they had to become more lean and more focused and get closer to their customers than ever before. Wazen said coming into this year, they found themselves very confident about the future.
“We have a better product experience, a more comprehensive and accessible value proposition and a growing market. But the real credit goes to the 120 000 small businesses who found a way to stay afloat and kept pushing. They are the reason we are here today.”
Wazen said it was crucial that they succeed in their mission for the economy to start growing again.
“We have an ambitious roadmap ahead. With over 5 million small to micro businesses in South Africa that still do not accept digital payments, there is seemingly no limit to how big this can get. We will continue to focus on being the most accessible and highest quality in-person/online payments platform for small and micro businesses and provide access to quality software tools and lending solutions to help them grow, he said.”
The business said it would do this by investing in new product innovation, in improving their customer experience, in brand and channels, new partnerships, and much more.