Hardware-Focused Fintech Yoco Is Betting On A New Machine

Yoco, a South African fintech startup known for its interest in hardware, has emerged from a relatively quiet period to unveil its latest product, the Yoco Neo Touch card machine, which it says is designed to cater to the needs of small businesses, promising to bring seamlessness and efficiency to transactions.

To get started, entrepreneurs simply need to acquire the Made-in-South Africa device and sign up on the Yoco app. This enables them to process instant payments and invoices, providing a hassle-free experience for their customers. The Yoco Neo Touch card machine is available at a cost of ZAR 899.00 (~USD 48.00).

Founded in 2013 by Katlego Maphai (CEO), Carl Wazen (chief business officer), Bradley Wattrus (chief financial officer), and Lungisa Matshoba (chief technology officer), Yoco aims to address the challenges faced by small businesses in obtaining card machines. Traditionally, these devices have been expensive to purchase and operate, creating an opportunity for fintech startups like Yoco and its rival, iKhokha.

In a Series-C funding announced in 2021, Yoco secured an investment of USD 83 M (approximately ZAR 1.6 B). This funding, contributed by prominent investors, including Dragoneer Investment Group, Breyer Capital, HOF Capital, and others, brought the total funds raised by Yoco to USD 107 M (about ZAR 2 B). The investment was earmarked for accelerating the development of Yoco’s financial ecosystem, which encompasses online and in-store payments, business software, and capital. Furthermore, Yoco aimed to expand its market presence beyond South Africa.

With its efforts, Yoco claims to have garnered a substantial user base of 350,000 merchants who rely on its services for swift and effortless payment processing. The company also revealed that it experienced an impressive 90 percent growth in sales in 2022, reflecting the changing consumer behaviour that increasingly favours digital transactions over cash. This shift necessitates rapid adaptation from businesses.

During the recent launch event of the Yoco Neo, Carl Wazen highlighted the company’s growth journey, stating, “This year, we pivoted from adolescence to adulthood.” He emphasized the discomfort associated with growth but viewed it as a catalyst for progress. Yoco’s primary market, the small business community, reported a remarkable 16 percent year-on-year increase in transactions since 2022, surpassing inflation rates.

Bradley Wattrus, the chief financial officer, explained that Yoco constantly strives to push boundaries and innovate to ensure safer and more convenient digital transactions. This drive for improvement leads to continuous redesigning behind the scenes. He stated, “We have a consistent mantra: it’s all about the people, the process, and the technology.”

The Yoco Neo Touch card machine is targeted at small South African businesses. Wazen emphasized that many small business owners work long hours, often acting as one-person operations. Their time is precious, and they require a seamless payment solution that can handle their high transaction volume, often exceeding 200 transactions per day.

Berno Potgieter, the group product marketer, highlighted a crucial security feature of the Yoco Neo. The device does not have a swipe mechanism, as this is where most security breaches occur. Instead, customers are required to insert their cards or use the built-in near-field communication (NFC) technology for contactless payments. Obtaining permission to exclude the swipe function involved extensive lobbying efforts with the Payment Association of South Africa and required several months of negotiation, he added.

The launch of the Yoco Neo Touch card machine marks another milestone for Yoco as it continues to make strides in providing innovative solutions for small businesses, with a focus on driving the adoption of digital transactions for merchants of various sizes.