Yoco digital payments platform bounces back
DIGITAL payments platform Yoco has exceeded R1 billion in monthly transaction volumes five years after it officially launched with only 500 customers and less than R1 million in monthly transactions.
The business, which now has 110 000 customers, reached R1.2bn in monthly volumes for the first time in December last year. Yoco co-founder and chief business officer Carl Wazen said on Friday that the recovery was faster than anticipated.
“If you had come to us in April 2020, when our merchants’ transactions were down -85 percent during lockdown level 5, and told us that we would surpass the billion-rand mark in a single month before the end of the year, we would have laughed. This milestone shows that small and micro merchants are as agile and resilient as ever and will find a way to bounce back. It also shows us that demand for digital payments is stronger than ever, with fewer consumers carrying cash and more businesses going fully cashless,” said Wazen.
He said more than 50 000 merchants had joined Yoco last year despite the lockdown and economic pressures. Accepting card payments was no longer a nice to have, but a fundamental part of doing business.
Yoco’s revenue dropped by more than 90 percent in the early days of the pandemic, and was now 50 percent ahead compared with pre-Covid levels and 10 times versus that in April last year. The growth has been driven by a strong recovery in small businesses at the end of last year, although the lockdown had softened the recovery of small and medium enterprises (SMEs) in January.
A second tailwind driving growth was the rapid acceleration of the adoption of digital payments, as consumers and businesses ditched notes and coins in the wake of the pandemic. According to Yoco research, the number of small businesses in South Africa that were fully cashless jumped by 300 percent from March to July last year.
Yoco has diversified its product offering, launching a suite of online payment products (Pay by link, virtual gift cards and integration with Woo Commerce and Wix), while it continued to grow revenue through in-person payments and Yoco Capital.
The company’s growth was focused on providing access to financial services for SMEs, where despite a bank account and card penetration of more than 80 percent, only 8 percent of businesses were able to accept cards.
This gap was concentrated in the 5.8 million small and micro-businesses that had not been the priority of traditional financial institutions.
Wazen, who co-founded Yoco with four friends – Katlego Maphai, Bradley Wattrus and Lungisa Matshoba – said challenges abounded on their way to their R1bn milestone. The lockdowns effectively barred tens of thousands of their merchants from trading the way they used to.
“This was a big shock to them and to us, but it forced us to get creative. We released a suite of online payment tools so that our merchants could continue to get paid during lockdown. We published the small business recovery monitor (a daily monitor of small business transactions compared to pre-Covid) so that small businesses knew how the lockdowns were affecting their peers by industry, by province, etc.”
The business said they had to become leaner and more focused and get closer to their customers than before. Wazen said coming into this year, they were very confident about the future.
“We have a better product experience, a more comprehensive and accessible value proposition, and a growing market. But the real credit goes to the 120 000 small businesses who found a way to stay afloat and kept pushing. They are the reason we are here today.”