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Yoco disrupts payments, now eyeing small business finance

New kid on the payment-devices block set to disrupt the credit business.

From a start-up business idea five years ago, device payment company Yoco now boasts 36 000 national clients and has shown annual growth of over 100% since fully launching three years ago.

Head of brand marketing at Yoco, Matthew Brownell, says the company launched its first retail store in Parkhurst (Johannesburg) in 2017 and Yoco devices are also easily available via retailers including Incredible Connection and Cellucity for a once-off cost of R1 799 or R2 799.

The Yoco device is one of the game-changers in the mobile payments space and has shifted things up by allowing small businesses to facilitate card payments by attaching a small device to their smartphone or tablet. Brownell says the beauty, retail and food and beverage sectors account for two thirds of its client base.

“Previously, small businesses had to approach the bank and apply for a card machine. The application would be processed in four to six weeks and the applicant had to show a proven business history as well their income statements,” he says. “We’ve flipped that model on its head – the Yoco sign-up process, once the small business has purchased a Yoco device, takes all of 10 minutes.”

Transaction fees for the business start at 2.95%, with rates automatically adjusted downwards as the business grows – a simple ‘sell more, pay less’ model for businesses doing less than R100 000 in card transactions a month. Larger businesses are able to get a customised rate from the start.

However, Brownell is quick to add that once a small business invests in a Yoco payment machine, they get immediate access to a support line, blog posts, monthly newsletters and emails as well as workshops and training with partners such as Google and Facebook.

Now in its third year of operation, Yoco has expanded its services to offer clients a finance option, and once again, is turning the traditional finance model on its head.

Pre-approved cash advances

Brownell explains that if a small business has been using a Yoco payment device for at least three months, they can get access to a pre-approved cash advance based on the income they have taken in over the previous three months.

“We launched this service in October last year in partnership with Retail Capital, which is a registered credit provider. Repayments of the cash advances are linked to business turnover and match the cash flow cycle of the business. It is structured so that when a client pays the business using a Yoco device, a small percentage of the sale goes towards repaying the advance.

Jason Sandell, owner of innovative Cape Town-based ice lolly business Las Paletas, was Yoco’s first client about three years ago. “We had started our novelty ice lolly business and were doing a number of food truck events when we realised we needed to be able to process card payments,” he says. “After we had made a few calls, Yoco got in touch with us to trial their product and we’ve never looked back.”

Sandell says the Yoco payment device is much quicker than a traditional point of sale bank machine, largely because it is a paperless system. Clients paying via a Yoco device have the option to receive a receipt via email or SMS. “In a small company like ours, customer service plays a big role and Yoco allows us to roll out the client experience in a convenient, short time frame, which is great for business,” he says.

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Banks, with their rigid criteria and arrogance methinks over time destroyed the so-called ‘’social connection’’ with their client – but they did that at their peril!
This is an awesome device and I have noticed that a lot of smaller medical etc. practices also started using Yoco devices.
Moral of the story: ‘’Change is about people, and in particular, it is personal’’!

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