Yoco the point of sale payments provider which helps small businesses accept card payments, last year achieved a number of milestones. In September they announced they had raised a Series B round of US$16 million (R230 million), led by Partech, a venture capital firm based in Silicon Valley, Europe and Africa.
That’s not all, the company has tripled in size since raising its latest funding in early 2017. They are currently adding more than 1 500 new merchants every month, making them South Africa’s largest and fastest growing independent card payments provider by number of merchants. The company now processes over R3.5b in card transactions on an annualised basis.
Following an impressive 2018, we speak to Bradley Wattrus, Yoco CFO, about continuing their mission to close the acceptance gap, and their ambitious goal to double the business.
From a Yoco perspective, our primary approach to looking at the market is to focus on the acceptance gap. Seventy five percent of adults in South Africa have at least a debit card, yet less than seven percent of businesses are equipped to accept a card – that includes both registered and informal businesses.
Our mission is to equip more businesses in South Africa to accept card payments – and this will hopefully be the development we see in the sector in the coming year. When a merchant begins accepting a digital form of payment, we see extremely encouraging growth.
Seventy percent of our customers started accepting card payments for the first time when they signed up with Yoco, and 57% of merchants report increased sales with the addition of a digital payments option. This is because both spend and basket size increases with card purchases, and card payments add a factor of credibility to shoppers.
Because of the impact on small businesses and merchants, it is critical that the acceptance gap is addressed – something we are working toward. As a business, our first challenge was to clear away the barriers small businesses faced when attempting to digitize their payments. We have reduced the approval process from three to four weeks to a digital sign-up taking five minutes.
Additionally, we have an over 95% approval rating – and because we offer our solution to both businesses and individuals, unregistered businesses can benefit from card payments. Additionally, we have removed the burden of 24 month contracts and monthly rental fees allowing merchants to purchase a card-reader upfront – freeing small businesses from needless costs when business is slow.
2018 saw Yoco launch some exciting new products. In 2019 we are focusing on growing adoption of these offerings.
Firstly, we brought our free-to-merchants Point of Sale Solution to market. It is smart device software that tracks sales, inventory, and staff performance. In 2019 we are adding additional features, making this free tool even more powerful. Secondly, we launched Yoco Capital – which is also exclusively available to our merchants. Merchants are prequalified for a cash advance, which can be accessed online in 30 seconds. This is an incredible cash flow product, designed to ensure that repayments are painlessly made through an affordable percentage of card swipes.
Yoco’s goal is to double each year – so, in 2019 we are chasing a very ambitious goal. However, there is so much need in South Africa for what we offer, that we feel we can achieve this, and in the process contribute to the small business and entrepreneurial ecosystem in SA.
The funding we raised will largely be focused on pushing to meet that goal.
The Yoco Small Business Pulse, our quarterly survey into the small businesses of South Africa, revealed that 83% of our merchants are positive about the next 12 months.
Even though the economy in general doesn’t have such a positive outlook, the entrepreneurial spirit is an indomitable force. And this positivity is what will turn South Africa’s economy around – we truly believe entrepreneurs are the future of the country – already employing about 60% of our workforce.
So, keep positive, keep building your businesses, and keep working at taking the economy forward.