South African bank card payment provider Yoco has raised $16 million (R245 million) in series B funding after tripling its users to 27,000 since the beginning of 2017, the company said on Thursday.
This brings the total investment into the point-of-sale company to $23-million, or around R320 million.
Yoco provides bank readers for small business, and says it offers a way to accept debit and credit cards that is seven times cheaper than traditional alternatives by removing monthly fees and lock-in contracts.
The company is adding more than 1,500 new merchants every month, making it South Africa’s largest and fastest growing independent card payments provider by the number of merchants, it says.
Silicon Valley-based venture capital firm Partech, which led the series of funding, has dubbed Yoco one of the top fintech companies in the world.
Other funding partners include Orange Digital Ventures, Dutch Development Bank FMO, South African-based FutureGrowth and existing Series A investors Quona Capital and Velocity Capital.
“[Considering that] consumer spending in Africa amounts to over $1.4 trillion, much of which is driven by small businesses, Yoco’s ability to use technology to solve real problems for African small businesses at scale makes it a unique implementation of our investment strategy,” Cyril Collon, partner at Partech, said in a statement.
Cape Town-based Yoco, which employs over a hundred people, launched in 2015 after noticing how hard it was for entrepreneurs to gain access to card payment services to help grow their businesses.
Only 7% of South African small businesses accept card payments, despite South Africa having a card penetration of 75%, Yoco CEO and co-founder Katlego Maphai said.
“Small businesses, fundamental to sustainable economic growth, are generally underserved in our part of the world due to their size.”
Maphai said the Series B funding allows them to scale their operations.
“Running a business is hard enough, we believe accepting money shouldn't be,” he said.
Yoco's entry-level card reader is available in SA for R1,800 once-off, or 16 weekly payments of just under R150 each. The company charges no monthly fees after that, only a per-transaction fee starting at just under 3%, which starts decreasing with a turnover of R20,000 a month.
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