Yoco, SmartWage help merchants provide salary advances

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Matt Brownell, head of brand marketing at Yoco.
Matt Brownell, head of brand marketing at Yoco.

Local point-of-sale payments provider Yoco has partnered with SmartWage to provide employees of struggling merchants with a lifeline during the coronavirus (COVID-19) lockdown period.

Yoco builds tools and services to help small businesses accept card payments and manage their day-to-day activities through its card reader devices, which connect with a merchant owner’s smartphone or tablet.

The company says since launching in 2013, it has grown to service more than 80 000 merchants across SA, with 150 employees across its offices in Cape Town and Johannesburg.

In its latest move, Yoco has collaborated with social impact start-up SmartWage to allow Yoco’s merchant partners to provide their employees access to a portion of their earnings at no charge, helping to circumvent some of the financial difficulties experienced by small businesses during SA’s extended lockdown period.

Through WhatsApp, SMS or USSD, SmartWage provides small business employees with access to their salaries and wages in advance.

Traditionally, the service has an associated transaction fee, but due to the coronavirus crisis, the companies say they are temporarily offering the services free of charge.

A report compiled by Yoco paints a bleak picture of the reality faced by South African SMEs and retail merchants, with the findings showing card transaction volumes have taken a massive knock since the lockdown was introduced in SA.

During level five and four lockdown, many local businesses halted operations, which negatively impacted their bottom line.

Simon Ellis, co-founder of SmartWage, says the collaboration with Yoco helps merchants minimise the administrative burden of giving employees advances, freeing up cash flow to improve productivity.

“As a young South African business, we are developing a keener understanding every day of the difficulties facing local businesses and their employees alike, so we are particularly proud to be associated with Yoco’s Support Small initiative, while also taking care of their merchant partners by giving them a financial lifeline,” notesEllis.

The partnership with SmartWage is one of several Yoco has negotiated in an attempt to assist small businesses with financial security.

Other partnerships include a collaboration with Google to help set up ad campaigns at no cost; a partnership with cloud accounting firm Sage to assist merchants to automate everyday business tasks; and another deal with ride-hailing firm Bolt’s Business Delivery service, to provide affordable business delivery services to merchants.

Fuelling growth

In 2018, Yocoraised R230 million in a series B funding round led by global investment firm Partech, with participation from other local and international investors.

Since the funding round, the point-of-sale payments provider grew its customer base from 25 000 to the current 80 000 merchant customers. It also launched the Yoco Capital finance solution, a suite of online payments products, and a service to facilitate credit card payments for small businesses through its card machines.

According to Matt Brownell, Yoco head of brand marketing, Yoco Capital has provided around R160 million in loans to merchants since its introduction.

“Historically, small businesses have been excluded from the full payments ecosystem by red tape, long-term contracts, prohibitively expensive hardware and opaque fees.

“We understand that accessing capital is one of the hardest challenges faced by small business owners. It's also one of the biggest reasons why small businesses remain small. We continue to offer solutions that leverage smart technology to help small businesses grow.”

Expansion into Africa is being considered as Yoco’s long-term goal, notes Brownell.

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