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Yoco: market makers, not mere market participants

Nov 28 2016 13:42
Carin Smith

Cape Town - Katlego Maphai, CEO of Yoco, founded the technology-driven company aimed at helping small businesses with four friends a few years ago.

Maphai studied information systems "with a business flavour" and his background is in mobile and telecoms advisory. The other three partners are Carl Wazen (chief business officer), Bradley Wattrus (chief financial officer) and Lungisa Matshoba (chief technology officer)

They share a passion for smart technology and a desire to help small business owners. The first version of their Yoco card reader app went live in October 2014. It was about two years in development before they took the app to market.

"The four founding members of Yoco always knew they wanted to work together," Maphai told Fin24. "Since then, we've been working attentively with small groups of engaged businesses as we refined every aspect of the product and experience. Today, hundreds of businesses are signing up with Yoco every month and we are just getting started."

Yoco is in the point of sale payments business.

"We help small to medium size businesses get easy access to a card payment service. They can sign up online - it takes only about five minutes and typically within two days they have a card machine and can start transacting," explained Maphai.

The card machine connects to a smart device like a smartphone or tablet. The app was written in-house and it has basic point of sale features. Customers can, for instance, add items they sell, track cash transactions and email receipts to clients.

"We have gone beyond just payment to include business intelligence. Customers have a real time feel of what is happening in their business. For example, they can see the business performance month-to-month and week-to-week. They can see what is selling well," said Maphai.

There is also a connection to an accounting platform.

Proactive model

"We have a proactive customer support model that sets us apart. It is innovative. Underpinned by alerts, we track these to see if everything is going alright," he continued.

"SA is quite fascinating. We thought we are solving a tech problem, but realised we are solving an access problem. More than 75% of the adult population in SA has a card. The government issues social grants on prepaid cards, for instance. The other side of the equation, however, is that few businesses accept card payments. This is called the acceptance gap: lots of cards, but not enough places to use them."

The Yoco team, therefore, investigated why so few businesses accept card payments. They found it is because it is hard for businesses to get a card machine. Another tough aspect for small businesses is the fixed costs involved in running the business. The smaller you are the higher the transaction fees.

"We started to understand what was restricting the small businesses and wanted to figure out how to serve them without charging a fixed cost," said Maphai.

For him the role of SMEs in the SA economy is a critical topic, because of the contribution they make to the gross domestic product (GDP).

"Third parties like us entering the market can use tech to reach SMEs and to service them at the same time - and we can do it at the right price," said Maphai.

"The moment a small business can accept an electronic payment, it takes you to the next level."

Security features

He describes the Yoco app's security features as state of the art.

"The tech we have is driven by a smart device and they are basically computers. It took us one year to get a licence to operate and we are certified by Visa and MasterCard," he continued.

About 70% of their current 5 000 merchants have never accepted card payments before.

"We want to be market makers not just market participants. We are trying to formalise SMEs to be businesses with a world class card payment system, which also enables them to see product performance in real time. This allows them to leapfrog," he says.

"We have seen many of these cases where a business starts with a market stall on a weekend and then grows to having a retail location. Yet they can use our same product at the market stall phase and the physical retail location. Even waitrons use our app."

Yoco certainly has expansion plans.

"We are an African company and want to empower entrepreneurs in Africa. In 2017 we are targeting a few other African markets and in 2018 we plan a full expansion," he said.

"It is our greatest pleasure to see how small businesses using our app are starting to syndicate like never before. They are active participants on our platform and we want them to start benefiting from their contribution to the economy."

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entrepreneurs  |  tech  |  small business
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