The South African fintech market is experiencing regulatory maturity and evolution, allowing for additional innovation in the sector.

This is according to Katlego Maphai, co-founder of South African fintech firm Yoco Technologies, which supports 200 000 businesses with payment solutions and business tools.

Last week, Maphai told ITWeb Africa that the market is growing. “I think you are going to see real, fierce, intense competition.

“You're going to start seeing really interesting things beginning to happen, even from the banks, which  is very positive. And in terms of the fintech space itself, I think you're going to see many new fintechs beginning to emerge within the ecosystem.”

Maphai spoke with ITWeb Africa on Thursday night in Cape Town, as Yoco unveiled a product range targeted at small and medium businesses.

The company hosted Yoco Next 2024, where its founders, product specialists and customers met to discuss its growing payment ecosystem.

Maphai provided key updates on Yoco's evolution since its inception in 2015, highlighting its transition from a payment-focused solution, to offering integrated payment and software solutions.

“We built infrastructure, our switch; introduced all these devices, just laser-focused on that. And that really allowed us to get to 200 000 merchants.

“But what's nice now is the market has matured. Back then, when you were trying to have a software conversation, it wasn't easy. People were still trying to make sense of payments.

“You know, 80% of those 200 000 merchants were taking payments for the first time through us. So, we've now seen the market mature. We've seen it evolve, and we started seeing our customers now asking for these types [new product range] of services.

“And in many respects, it's not just a continuation of what we started, but with a lot more confidence and, yeah, a lot more knowledge. Even how we've simplified everything, made it work together, that's years of knowledge.”

Promoting creativity

The interview with Maphai also addressed the significant growth potential within the South African fintech landscape, marked by competition that drives innovation.

Furthermore, Maphai advocated for the Start-up Act in South Africa to facilitate growth.

Turning to the growing competition in the fintech space, he commented: “Look, so the payment opportunity is massive. We're still inch-deep into the market. There's still a lot more to do in terms of de-cashing and getting additional participation.

“And competition is good. I think something that South Africa is not used to is competition. If you look just structurally at the economy, there's a lot of concentration. 

"And without competition, you don't get innovation, you don't unlock new market segments, you don't penetrate, you don't drive access.”

Maphai continued: “And what I love in our space is that there's real competition, a way that you don't typically see in the country. And you're going to see more and more innovation. It's pushing us, like this launch, we're responding to customer needs,  which is a good thing.

“It's pushing us to evolve things, and in the end, who benefits? The consumer. And that's what's important. And we're very much invested in that to move things forward.”

The Start-up Act is needed right now

Addressing the need for and urgency of the Start-up Act in South Africa, Maphai commented: "We needed it when we started the company. 

"We went through the pain of raising capital, then needed to wait for approvals from the South African Reserve Bank that future proceeds could be repatriated to satisfy our new investors, this process took weeks and impacted our cashflow when we most needed it."

“It was really incredible being in the parliamentary session and seeing the questions and the engagement. Things are feeling serious now."

Expanding appetite

On expansion across Africa, Maphai said Yoco has the appetite, but different regulations on the continent make it difficult and the company for now will focus on its home market.

"There is a lot of sensitivity (regulatory demands) and we want to expand. I mean everything we're building now, it's not just for South Africa, but it's about how we expand.

"We are looking for partners who can support us with local regulation, to simplify the process of bringing our products to new markets. This will speed up new market entry, while de-risking us from a licensing perspective and how long that generally takes."