A company started by four friends who identified a problem for small retailers has grown into the largest independent points-of-sale business in South Africa.
The Yoco card machines, and others like it, are popular with small businesses, from car guards and flower sellers to restaurants.
Yoco was started in Cape Town in 2015 by Katlego Maphai, Bradley Wattrus, Lungisa Matshoba and Carl Wazen. At the time most small businesses relied on cash payments; only about 250,000 had access to card machines.
Today about a million use card machines as a main source of payments, with about 200,000 using Yoco versions. The company employs hundreds of people to ensure operations run smoothly.
“Getting a card machine was very hard and you had to wait weeks,” says Wazen. “Businesses had to sign long, prohibitive contracts. They were getting the short end of the stick, and I think that remains the case.”
He adds: “Small businesses are the engine of the economy and in many ways remain underserved.”
He says the company knew payments were going to be the entry point, if not a panacea. There would always be more things to fix. “The way we solve a problem will evolve. The journey is quite dynamic, but at our core it’s about enabling people to thrive through open commerce. Access has always been central to what we do.” Half the money generated by these businesses stays in the community, he says.
One of the ways that the company innovates is by using sales data. It recently released its seasonal spending report for December. The report shows that spending in towns across the country increased significantly. There was an increase in year-on-year spending in the major metros, with the biggest (8%) in Cape Town.
In relative terms, however, small towns in the Western Cape had an even larger increase in spending during the festive season. Still Bay led the province with a 288% increase, followed by Plettenberg Bay (138%) and Mossel Bay (105%), both spending more than double from November to December.
Small businesses are the engine of the economy and in many ways remain underserved
— Carl Wazen
In Gauteng, which many people leave during December, spending declined in several major areas. Centurion, for example, had a 10% drop between November and December. Soweto, however, was an exception with a 35% growth rate, the only area in Gauteng to have a double-digit increase in that time. This points to a “celebration at home” effect, where the festive season is defined by family reunions and local tradition.
There was also an increase in spending by international visitors. According to the Yoco data, foreign tourists spent R500m with Cape Town’s small businesses. Bartenders and waitstaff earned R14m in tips from those tourists, while international card transactions were up 23% year on year in Cape Town
How can this data help small businesses? Yoco says it is about pinpointing where the money goes. In coastal towns, simplifying menus or services can help make busy days more manageable, for instance. When businesses understand where and when money is spent, they can plan better, says Wazen.
“These are interesting data points that shine a light on a crucial part of the economy,” he says. “We want to be more embedded in how small businesses operate, to the extent that we can help them run better. It’s about us helping them navigate the challenges of managing costs during those periods and forecasting for the next season.”
Wazen is especially proud of the company’s new product, the Yoco Counter. It helps businesses manage sales operations from one machine, taking payments, managing sales and tracking stock and staff in real time. The company says it helps businesses save time, reduce admin and stay in control without the usual complexity.
“People still see us as the blue card machine company. We’re very proud of that, but it’s the tip of the iceberg. We’re giving merchants the ability to get more control,” says Wazen.
He says building Yoco wasn’t easy, but friendship and trust between the founders enabled it to thrive. Three of the founders remain actively involved in the company. Maphai stepped down as CEO last year but will stay involved in long-term strategic planning.
“There was great chemistry between the four of us. We were good friends. We were at similar stages in our lives, with shared values and vision, and we felt like we had to tackle something important,” says Wazen. “Trust is crucial and when you’ve got a real friendship, you’re operating at a trust premium. We’ve navigated a lot of ups and downs; we’ve learnt that it’s a marathon.”
He adds: “We’re the largest independent payments company in the country and we don’t take that for granted. It’s a big responsibility.”
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