Some people can’t see the wood for the trees, while others think not only outside the box but also inside and around it. These are the innovators – the problem-solvers in society who not only identify a problem, but come up with solutions to make it better.

In psychology, the concept of “functional fixedness” suggests that most people tend to look at problems in a particular way, which locks them into a conservative view of the world in which they cannot think of using an object in a new way that might solve the problem.

Its opposite – cognitive flexibility – is a skill that enables us to adapt behaviour to achieve goals in a new or volatile environment. Flexible thinking is the key to creativity and inventiveness; to make new connections between concepts or objects, much like MacGyver would knock together a lie detector from an alarm clock and a blood pressure pump.

Katlego Maphai, co-founder and CEO of Yoco Technologies, is just such an innovator. He saw a quick fix to a financial services problem, improved the idea and roped in three of his friends to build a business that solves one of the most fundamental problems of a small business: receiving payment.

Carl Wazen and Maphai had both worked for Delta Partners, a telecoms advisory, and Rocket Internet, a German venture capital company and incubator for online start-up development. Bradley Wattrus is an actuary and Lungisa Matshoba, a tech wizard who worked on apps long before smartphones were even a thing.

Maphai had stumbled on the solution to a customer “pain point” while dining at a hole-in-the-wall eatery in San Francisco in 2012. A US-based friend had paid for their meal – not with cash, as he would have expected to do back home – but with his bank card via a portable device hooked up to a white dongle.

This gadget, which was essentially a remodelled Android phone, was simple in its design but a game-changer for small businesses: by enabling them to receive digital payments, they could operate on a more level playing field and increase their “basket size” by not expecting customers to stump up the cash.

Back home in South Africa, he presented the concept to his compadres and they launched Yoco three years later, to address the “pain points” that small businesses face when trying to get their hands on a point-of-sale device through a financial institution.

The banks don’t make it easy, Maphai says, because the barriers to entry are high, exclusionary and expensive.

“We came out of the telecoms media and technology industry; we’d seen the proliferation of mobile phones and the ease of access with prepaid phones,” he explains.

But on the card-issuing side, it was the complete opposite: it was about asking for permission, as if the institution was doing you a favour by giving you a card machine.

“All we really did was take the prepaid phone analogy and apply it to payments. That’s how we see our terminals: they are literally Android phones with a card machine in them.”

Yoco plans to continue growing its network of small businesses and expand into other African markets. It is already in talks with various foreign financial organisations in this regard. (Photo: supplied)

Yoco sells its low-cost devices to the customer, instead of locking them into contracts. There are no monthly fees and the devices accept all major cards.  

Since launching Yoco Technologies seven years ago, Maphai, Wattrus, Wazen and Matshoba have expanded the mobile point-of-sale company to more than 300,000 merchants, processing about R30-billion in transactions per year.

“Micro and small businesses make up the majority of businesses that drive the majority of employment in the country and contribute at least half of the GDP. And they’re just not being looked after. We just realised that we could have the highest impact on these customers, and founded the company in 2013. But we actually only launched at the end of 2015,” Maphai explains.

Today, Yoco has offices in Cape Town, Johannesburg, Amsterdam, and, soon, “somewhere in North Africa”, employing more than 350 people. He’s keeping his cards close to his chest, as the new market in North Africa will be announced in the new year.

“I think the thing we’re most proud of is that eight out of 10 customers are taking electronic payments for the first time through us. So probably the most important KPI in the business is what we call ‘new to cart’ – it’s a measure of us creating a market and solving a genuine problem, by getting folks out of [relying on] cash.”

It’s about getting merchants to take their first card payments, and getting them on that digitisation and formalisation journey.

So, 2022 has been a big year for Yoco – it crossed the 300,000 barrier in terms of merchants onboarded, and launched the Khumo Print, its smartest standalone card machine with a built-in printer.

Yoco’s going places, he says, starting with a new market every year for the foreseeable future. DM168

How we chose the People of the Year winners

In the past, Daily Maverick journalists decided who they thought warranted the title of Person of the Year, but for the second year running, we have asked readers to vote for their preferred choice, with the proviso that we still have the final say. Choosing the annual winners is a labour of love because that’s what it takes to get a bunch of DM editors to decide whether they agree or disagree with the choices of 13,000 readers.  Over the next few days, we shall republish online all the results in various categories. – Heather Robertson, DM168 editor

This story first appeared in our weekly Daily Maverick 168 newspaper, which is available countrywide for R25.