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Case Study Title: Yoco Technologies: explores how Yoco strategically combined
Democratising Digital Payments for customer-centric innovation, technological
South Africa's Small Businesses diffusion, network effects, and strategic
partnerships to scale its offerings and reach
Case Study Narrative over 200,000 small business merchants by
2024.
Introduction
Background and Market Context
Yoco was founded in 2013 by four
entrepreneurs: Katlego Maphai (CEO), Over 70% of South African transactions in
Carl Wazen (Chief Business Officer), 2013 were still conducted in cash, with
Bradley Wattrus (Chief Financial Officer), informal businesses underserved by
and Lungisa Matshoda (Chief Operations traditional banks and financial institutions
Officer). The idea originated with Katlego (GSMA, 2015). Many lacked the
Maphai, who recognised the systemic documentation, infrastructure, or
exclusion of small businesses from card- transaction volume required to justify
based payments while working in the tech digital payment solutions from legacy
and financial services sectors. Maphai providers. Yoco identified this gap and
envisioned a platform that would make developed a low-cost card reader solution,
digital transactions accessible to the which worked via mobile phones and
majority of merchants operating outside integrated with banking APIs. The firm
the formal economy. focused on underserved small business
owners such as hairdressers, food vendors,
The founding team came together through mechanics, and spaza shop owners.
professional and social networks. Maphai
and Wattrus had previously worked Yoco’s key innovations included:
together in consulting and remained in
close contact. They met Carl Wazen, who Mobile-connected card readers
had a background in business development affordable to small business owners
and international markets, while exploring Simplified onboarding with
fintech solutions abroad. Lungisa minimal documentation
Matshoda, with operational and Daily settlement of payments
engineering expertise, joined as the fourth POS systems tailored for the
co-founder after collaborating with the township economy
group during early product testing. Their Integration with third-party
combined expertise in finance, business, accounting and inventory apps
and engineering formed the foundation of
Yoco’s strategic direction. These innovations were supported by a
broader strategy that blended principles
Despite the growth of digital infrastructure from technology strategy, innovation
in South Africa, the informal and management, and product development
township-based economies remain largely theory.
cash-driven, hindering financial inclusion,
scalability, and business transparency Technology Adoption and Diffusion
(World Bank, 2020). Founded in 2013, Strategy
Yoco Technologies is a fintech firm that
has emerged as a disruptor, addressing Yoco’s market penetration followed the
these structural barriers by providing classic technology diffusion S-curve,
portable, affordable card readers and point- initially attracting innovators and early
of-sale (POS) systems. This case study adopters (Schilling, 2009). These were
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forward-thinking entrepreneurs in urban Basic requirements: fast
centers who valued efficiency and transaction processing, power
convenience. As customer trust grew, the efficiency, secure encryption.
early majority—more risk-averse users in Performance attributes: real-time
peri-urban and township areas—began transaction tracking, accessible
adopting the technology. dashboards.
Delighters: AI-based fraud
To successfully cross the chasm (Moore, detection, integration with mobile
1991), Yoco applied a beachhead ordering systems.
strategy: they targeted vertical niches such
as hair salons and tuk-tuk drivers who These insights fed into an agile
were underserved by banks but prototyping process where hardware and
demonstrated frequent, small transactions. software iterations were co-developed and
This focused approach allowed Yoco to tested in live environments. A stage-gate
build social proof and a strong base of model governed investment at each
positive word-of-mouth referrals. milestone, limiting sunk cost exposure
Furthermore, they employed Delphi while ensuring usability, feasibility, and
method-informed demand forecasting to viability (Schilling, 2009).
estimate adoption across different
provinces, adjusting their marketing and Product development was further enriched
onboarding resources accordingly by perceptual mapping and conjoint
(Schilling, 2009). analysis techniques, helping the firm
prioritise which combinations of features
The Bass diffusion model, which best balanced affordability with value
segments adopters into innovators and perception among different user types
imitators, was evident in Yoco’s trajectory. (Chapter 7, Product Development Slides).
Social influence—driven by testimonials,
social media endorsements, and localised Strategic Use of Network Effects and
campaigns—facilitated exponential growth Technical Standards
among imitators (Rogers, 2003).
Yoco’s scaling success is underpinned by
Product Development Aligned with strong network externalities. As more
Stakeholder Needs merchants adopted Yoco’s platform,
customer trust increased due to the
From its inception, Yoco followed a visibility of its brand. This represents a
market-pull innovation model, where direct network effect. At the same time,
technology development was driven by Yoco’s expansion into value-added
clearly articulated user needs (Schilling, services—such as loans, analytics, and
2009). They employed digital inventory management—created indirect
ethnography to observe behaviours of network effects, increasing the utility of
informal business owners in their the system (Schilling, 2009).
operating environments. This revealed
needs for offline functionality, durability, A large installed base acted as a barrier to
multilingual interfaces, and ease of entry for competitors. By targeting urban
training for staff. and township SMEs simultaneously and
subsidising devices for early users, Yoco
Yoco applied the Kano method to built rapid market density. The strategy
distinguish essential product features: mirrored increasing returns principles:
the more users onboarded, the more
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valuable the system became to new
adopters.
References
On the technical side, Yoco made its
systems interoperable with open GSMA. (2015). State of the Industry
standards, enabling integration with Visa, Report on Mobile Money. London: GSMA.
Mastercard, M-PESA, and local banks.
However, core elements such as its Moore, G. A. (1991). Crossing the Chasm:
machine learning fraud engine remained Marketing and Selling High-Tech
proprietary, creating a lock-in mechanism Products to Mainstream Customers.
and protecting intellectual property. HarperBusiness.
Strategic Partnerships and Ecosystem Rogers, E. M. (2003). Diffusion of
Building Innovations (5th ed.). New York: Free
Press.
Yoco recognised early that scaling
required ecosystem collaboration. Key Schilling, M. A. (2009). Technology
partnerships included: Strategy for Managers and Entrepreneurs.
Prentice Hall.
Telecoms: With MTN and
Vodacom to ensure strong device World Bank. (2020). Financial Inclusion
connectivity. in Sub-Saharan Africa. Retrieved from
Banks: With FNB and ABSA to https://www.worldbank.org/en/topic/finan
streamline payment settlement. cialinclusion
Payment gateways: With
Mastercard to improve global card
acceptance.
These relationships reduced infrastructure
costs and increased system legitimacy,
enabling Yoco to reach micro-merchants
with limited digital exposure. Moreover,
the firm’s alliances ensured platform
compatibility, a core principle in technical
standardisation (Schilling, 2009).
Conclusion
Yoco Technologies represents a textbook
case of innovation strategy executed
effectively in an emerging market context.
Its ability to combine customer insights,
technology diffusion models, stakeholder-
focused product development, and
ecosystem partnerships has redefined
digital payment infrastructure in South
Africa. The case also provides valuable
insights for other African fintechs aiming
to solve development problems through
inclusive innovation.
