When Katlego Maphai, Lungisa Matshoba, Carl Wazen, and Bradley Wattrus founded Yoco, fewer than 10% of South African businesses had card machines, despite over 80% of people having access to cards. Today, Yocoempowers over 200,000 business owners, but this remarkable achievement came with significant hurdles in licensing, funding, and scaling.
The seeds of Yoco were planted through fortuitous personal connections. Maphai, now Yoco’s CEO, reconnected with Matshoba, the company’s Chief Technology Officer, years after they had attended the same aftercare as children. Maphai met Wazen, Yoco’s Chief Business Officer, at his first consulting job, and he crossed paths with Wattrus, now Chief Financial Officer, while working on a project in Lagos, Nigeria. Upon returning to South Africa, the four friends decided to start a business together, bonded by complementary skills and shared chemistry.
Initially, they lacked a concrete idea but were united by a desire to address a pressing need. A closer look at South Africa’s payment landscape revealed a glaring gap: small and micro businesses, which make up 99% of the country’s enterprises, had no practical means of accepting card payments. This was not due to a lack of demand—businesses were desperate for card payment solutions—but because obtaining a card machine was an arduous process, akin to securing a mortgage.
The team identified this gap as a $50 billion annual transaction value opportunity, later revised to $100 billion by 2021. They realized that traditional banking processes were excluding a large portion of the economy. This exclusion not only stifled business growth but also hindered broader economic participation. Addressing this issue became the driving force behind Yoco’s mission.
By 2013, Maphai, Wazen, and Wattrus had relocated to Johannesburg, determined to secure the banking license required to operate. This process proved grueling. As young entrepreneurs under 30 with no prior banking experience, they faced skepticism from institutions. Complicating matters, around 15 other teams were vying for similar licenses. The team needed the license to attract funding but also required funding to secure the license—a classic chicken-and-egg dilemma.
After a year of relentless effort and a detailed 100-page proposal, the team convinced a bank to share its acquiring license with Yoco. The breakthrough came from their innovative approach. While their lack of traditional banking experience was initially a drawback, it ultimately set them apart. The bank believed Yoco’s fresh perspective offered the best chance to simplify the onboarding process for small merchants.
Yoco’s journey coincided with a pivotal moment in the evolution of mobile point-of-sale systems. In 2013, Mastercard and Visa introduced frameworks for merchant aggregators, enabling companies like Yoco to streamline small merchants’ access to card payment solutions under a single merchant account. Recognizing this opportunity, Yoco aimed to become South Africa’s first licensed payment facilitator.
Securing the license marked a turning point, but the challenges did not end there. The team faced significant funding hurdles, engaging with 50 to 100 institutions before finding backers willing to bet on their vision. Critics warned that large banks would crush the fledgling company, but Yoco’s founders persevered, driven by the conviction that their solution was transformative.
Unlike traditional start-ups, Yoco couldn’t test its product or gather customer feedback during its early stages due to licensing constraints. The team relied on extensive research, resilience, and unwavering belief in their mission. Their hard work paid off when the bank endorsed their vision, paving the way for Yoco to reimagine payment accessibility for South Africa’s small businesses.
Today, Yoco stands as a testament to innovation, collaboration, and perseverance. By tackling systemic barriers to financial inclusion, the company has empowered thousands of entrepreneurs, transforming how South African businesses engage with the digital economy. Their journey from a nascent idea to a market leader underscores the power of vision and determination in solving real-world challenges.
