South African fintech startup, Yoco has, in just over two years managed to offer a large number of businesses access to card payment facilities and their trading history online.
Yoco was founded by four friends, Katlego Maphai, Carl Wazen, Bradley Wattrus and Lungisa Matshoba who share a passion for technology and helping small business owners.
The company’s aim is to expand access to card payments to all types of SMEs, regardless of size, industry and even location. They offer mobile card readers that can be used to accept payments both at the store and on the go, with an application process that takes a few minutes online.
Yoco CEO and Co-Founder, Katlego Maphai says that in order for the SME sector to grow, financial institutions need to match the needs of small businesses, and it cannot remain business as usual because the very criteria set by financial institutions to manage risk when providing these services, are sometimes hindrances to access for small businesses.
IT News Africa interviewed Maphai to find out more about the growth of small businesses and how that could impact the economy.
1. With the growth of mobile penetration in Africa, how can small business owners leverage digital payment solutions?
Small business owners can do a number of things that will help them grow through electronic or digital payments. The advantages of digital payments are many. To give an example, payments solutions for SMEs aren’t just about the money, and should no longer be seen as a standalone aspect of a business. Payment solutions can help entrepreneurs mine marketing data, enhance customer satisfaction, help with forecasting and cut down on admin and costs.
Electronic payment solutions can also help small business owners to better manage their cash flows. Being in control of your cash flow as a small business owner ultimately gives you more control over your business. Not only can you pay your staff and suppliers on time, but you can make better decisions a lot faster and with more confidence.
2. How does accepting card payments or not accepting card payments affect SMEs?
Getting a card machine can often seem like a daunting task, especially for small and new businesses. Many entrepreneurs question if it’s worth their while, but once businesses start using them the benefits become clear.
Being able to process card payments can be the difference between success and failure for a business. Today’s customers prefer to pay by card and therefore don’t always carry cash. There are a few reasons for this, 1) it’s safer, 2) they can better track their finances, 3) cards are usually linked to loyalty programs, and 4) cards are convenient because one doesn’t need to queue at ATMs.
Also, customers usually spend more at your business when they’re paying with a card, which means you sell more. A study by Dun & Bradstreet found that customers spend 12 – 18% more when paying by credit card than when paying with cash. This is because paying by card means easier access to capital on the spot, which means it’s easier to spend money.
3. With so much success in South Africa, Is Yoco looking to expand further into Africa?
We believe that enabling card payments is transformative and we want to do that for African SMEs. Yoco operates in Cape Town and Johannesburg and we are planning to expand into the rest of Africa.
4. SMEs have the potential to contribute vastly to the economy, how is not being able to accept payments affecting this?
SMEs contribute close to 50% to GDP and drive around 60% 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. The difficulty in accessing financial services for SMEs is a real impediment of growth for the sector.
Access to financial services for these businesses usually means survival or collapse of these businesses. 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 creates an opportunity for SMEs to play a vital role in resuscitating the country’s economy. SMEs are the future of commerce in South Africa and across the continent, and if not supported, we might not realise the South Africa we want to see in the future: a South Africa free of poverty and unemployment.
5. How has being listed as one of 250 most promising fintech organisations by Insight impacted Yoco?
We are grateful, and encouraged to work even harder for being recognised as one of the top 250 most promising fintech companies in the world, by global research company CB Insights. We were one of only five African fintech companies that made it onto this prestigious list, that means we are doing something right.