In 2012, accepting a card payment in South Africa was technically ordinary and operationally exclusionary.
The technology worked. The problem was who it had been designed to serve. Traditional card acquiring made sense for businesses with predictable turnover, formal premises, paperwork in order, and enough volume to justify the bank’s effort. For the independent retailer, mobile operator, salon, café, tradesperson, or new business, getting connected could mean long applications, contracts, monthly fees, and a process that seemed to begin with suspicion.
Yoco’s founders saw a market in that friction.
Katlego Maphai, Bradley Wattrus, Carl Wazen, and Lungisa Matshoba did not need to invent electronic payments. They needed to make the existing system usable for businesses that had been treated as too small, too young, or too inconvenient.
That distinction shaped everything that followed.
The opportunity was hiding inside the rejection
The founding insight was not that South African small businesses wanted card machines. It was that a large group of businesses had been excluded from accepting cards by the economics and operating habits of the institutions already providing them.
Banks had rational reasons for their model. Merchant acquisition involved paperwork, risk assessment, hardware, installation, support, and account management. When those costs were built around large retailers and established merchants, the smaller operator became difficult to justify.
Yoco reversed the question.
Instead of asking whether a small merchant was valuable enough for the existing process, the founders asked what the process would need to become for that merchant to be valuable.
Yoco’s important innovation was not the device. It was redesigning the cost of saying yes.
The answer required more than cheaper hardware. Onboarding had to be faster. Pricing had to be legible. Contracts and fixed monthly fees had to disappear. Distribution could not depend on a bank relationship manager deciding the opportunity was worth pursuing.
The merchant needed to be able to start small without being punished for being small.
The card reader was only the visible part
Yoco began testing its product before its public launch in 2015. The early proposition was easy to understand: a compact card reader, connected to software, that allowed a small business to begin accepting card payments without the traditional complexity.
But the simplicity presented to the customer required complexity behind the scenes.
Payments are infrastructure. Money has to move correctly, settlement has to happen when promised, fraud has to be managed, and support has to work when a transaction fails in front of a customer. A merchant might forgive a clumsy analytics screen. They will not forgive missing revenue.
That made trust an operating requirement rather than a branding exercise.
Yoco’s early growth depended on proving, merchant by merchant, that the simpler experience was not a shortcut around reliability. The company had to remove institutional friction without making the product feel institutionally weak.
This is the part that disappears when the story is reduced to a clever device. Hardware made the proposition tangible. The harder work was building the systems, support, distribution, and credibility that allowed a business owner to place a day’s trade in Yoco’s hands.
Distribution was part of the product
Large financial institutions tend to distribute through branches, relationship managers, and established customer bases. Those channels work well when the target customer already fits the institution.
Yoco’s market required a different kind of reach.
Independent businesses are fragmented by definition. They operate across industries, neighbourhoods, levels of formality, and stages of maturity. There is no single procurement department to persuade and no one contract that unlocks thousands of locations.
Every merchant has to be reached, understood, onboarded, and supported.
That makes customer acquisition look inefficient from a distance. It also creates an advantage once the process is working. The company that learns how to serve fragmented customers repeatedly builds knowledge and distribution that a larger competitor cannot reproduce simply by lowering a price.
By August 2018, Yoco said it served more than 27,000 merchants and processed over R3.5 billion annually. The numbers showed that the supposedly uneconomic customer could become an attractive market when the operating model was rebuilt around them.
COVID exposed what the first product could not do
The card reader solved for an in-person transaction. COVID-19 made in-person transactions impossible for many of the businesses Yoco served.
That moment exposed a risk inside the model. If Yoco remained only a point-of-sale hardware company, its fortunes would rise and fall with foot traffic. Its customers needed ways to be paid when the counter, table, treatment room, or market stall was closed.
The company accelerated online and remote payment products. That shift was not merely a reaction to lockdown. It clarified the broader opportunity: small businesses did not need a card machine. They needed a practical commerce system that could follow the ways they actually sold.
Payments remained the entry point because payments produce an unusually clear signal. They show that a business is active, how it trades, and where friction appears. Once a company earns the right to handle that transaction, it has a foundation from which to offer more useful tools.
Yoco began moving from a device company toward a platform.
Capital followed the operating proof
Yoco raised a $16 million Series B in 2018. In July 2021, it announced an $83 million Series C led by Dragoneer Investment Group. At the time, the company said it served more than 150,000 small businesses.
The funding headlines made Yoco look like a sudden fintech success. The sequence matters more than the size of the rounds.
The company first spent years proving that it could acquire and retain a customer traditional providers had struggled to serve economically. Capital arrived after the operating model had demonstrated that fragmentation was not fatal.
By March 2023, Yoco said more than 350,000 businesses had used its products and that it processed more than $2 billion annually.
Those figures also reveal the next challenge. A large merchant base creates opportunity, but it creates expectations too. Customers who begin with payments eventually need software, online selling, reporting, capital, and tools that help them run the rest of the business. Competitors can copy pricing and hardware. The deeper defence is becoming more useful without becoming more complicated.
The founder transition is part of the story
In May 2026, Yoco announced that Carsten Höltkemeyer would become chief executive from 1 June, with co-founder Katlego Maphai moving into the role of Executive Chairman.
Founder transitions are often framed as endings or corrections. This one is better understood as a test of what Yoco has built.
The company is no longer proving that small merchants deserve access to card payments. That argument has been won. It now has to turn its distribution, merchant relationships, and payments infrastructure into a durable commerce platform while expanding beyond the market where it learned the problem.
That requires a different organisation from the one that began by challenging the acquiring model.
The risk is familiar. Companies that win by removing complexity can slowly recreate it as they add products, layers, markets, and management. The next version of Yoco has to preserve the clarity of the original proposition while operating at a scale the founders could not have designed for in 2012.
What builders should take from Yoco
Yoco’s story is often told as financial inclusion through technology. That is true, but too broad to be useful.
The sharper lesson is about market design.
An underserved customer is not automatically a good business. Sometimes the incumbent is ignoring them because the economics really are poor. The opportunity appears when a founder can identify which costs are inherent and which costs exist only because the incumbent’s operating model was designed for somebody else.
Yoco found a customer that looked uneconomic inside a bank’s process and built a different process.
It reduced the cost of acquisition, onboarding, and service. It made the offer easy to understand. It allowed merchants to begin without taking on fixed costs they could not justify. Then it used the transaction relationship as the foundation for a larger product.
The card reader mattered. The more important achievement was making the customer behind it worth serving.