South African point-of-sale (POS) payments provider Yoco is launching a new, lower-cost POS terminal as it looks to double its customer base from 50 000 to 100 000 in the next year ahead of a further fundraising round.

The company said the new terminal, called the Yoco Go, is aimed directly at addressing underserved small and micro businesses that have not previously used such devices for cashless payments from customers.

The growth – it has already almost doubled its merchant base from 27 000 to the current 50 000 in the past 12 months – comes after Yoco raised US$16-million (R248-million at the time) in a series-B fundraising round in September 2018.

Founded by Katlego Maphai, Carl Wazen, Bradley Wattrus and Lungisa Matshoba, the idea behind Yoco was to “address the pain points that small businesses face when trying to get a card machine”.

“The launch of the Yoco Go card machine will radically lower barriers to entry for small businesses,” CEO and co-founder Katlego Maphai said this week. “The device will allow them to receive payments with a full-featured, tap-enabled card machine for less than half the price of alternatives.”

Maphai said that although it’s estimated that there are more than 350 000 POS systems in South Africa, only 7% of small businesses accept card payments. “This excludes them from engaging with a large portion of the buying public in a country that has over 75% card penetration.”

Yoco hopes the Yoco Go product will help address this gap. The machine retails for R799 and has no monthly contracts or fixed fees. The company makes money by collecting a percentage of the transaction value – a maximum of 2.95% and an average, across the board, of about 2.5%.

Maphai said in an interview with TechCentral that Yoco POS machines are now processing an annualised R6-billion in transactions, or R500-million/month.

Offshore expansion

From next year, the company plans to explore internationalisation and is considering both neighbouring countries and even other continents. This, coupled with further product development costs, is likely to lead to the company seeking to raise more capital in 2020.

Last September’s series-B round was led by Partech, a venture capital firm based in Silicon Valley, Europe and Africa. Others who participated in the round included Orange Digital Ventures, FMO (the Dutch Development Bank), South African-based FutureGrowth, and existing series-A investors Quona Capital and Velocity Capital. That round brought the company’s total investment to $23-million.

Maphai said Yoco is “nowhere near” saturation in the South African market. “There are five million businesses in the country, and we think one million of those are addressable” by Yoco.

“Our focus to 2020 is becoming dominant in South Africa, but we have started looking at other markets. We will do a regional play and may even look beyond the continent. We do want to build a global company.” — © 2019 NewsCentral Media