JOHANNESBURG (Reuters) – South African fintech start-up Yoko raised $16 million from international and local investors in a private funding round, it said on Thursday.
Yoko offers a card reader and app that allows users to turn smartphones into payment terminals and the company, started in 2015, is targeting small businesses that don't currently accept cards.
According to Yoko, only 7 percent of South African small businesses accept card payments, despite a card penetration rate of 75 percent.
The company has more than 27,000 small businesses, 75 percent of which had never accepted cards before.
It is adding more than 1,500 merchants per month, which Yoko says makes it “South Africa's largest and fastest growing independent card payments provider by number of merchants.”
Investors in the funding round included US-based venture capital firm Partech, Orange Digital Ventures, the Dutch Development Bank and South Africa's FutureGrowth.
“There is investor confidence and appetite for new business models and untapped sectors in South Africa,” said co-founder and chief business officer Carl Wazen.
Co-founder and Chief Executive Katlego Mafai told Reuters the company will use the money to expand its network of small business merchants, invest in product development and attract talent.
He said he came up with the idea for Yoko after encountering payment processor Square Inc. at a “hole in the wall” barbecue restaurant in the United States.
Mafai said, “The owner takes out this Android phone, which was completely broken, she puts in the square dongle, takes the card and he (his friend) signs with his finger. These lightbulbs just went off in my mind.”
Yoko had raised $3 million in a previous funding round.
(Reporting by Nkobile Dudla; Editing by Jason Neely)