Why We Built Nexo: The R6.3M Annual Fee Problem That Started It All

There's a screenshot I still have on my phone. It's a Yoco statement from June 2024. R463,220.40. That's what we paid in transaction fees. In one month.

I remember scrolling past it a few times before it actually landed. I'd seen big numbers on those statements before,but that month something about it stopped me. Maybe it was because we'd just had a rough quarter. Maybe I was just tired. Either way, I sat there staring at it and thought: where is this money actually going?

What New Era Agency looked like in 2024

For context,New Era Agency isn't a single business. We run multiple retail and hospitality operations across Johannesburg and Cape Town. Card payments go through everything we do, all day, every day. For years we'd been on Yoco because it was easy. You sign up, you get the machine, it just works. And honestly, when you're small, that simplicity is worth paying for.

But we weren't small anymore. We were processing serious volume. And "just works" was costing us R463k a month in transaction fees alone. On top of that, we were paying Loyverse R70k a month for POS software across our locations.

Total monthly bill to run our payment and POS stack: R530,000.

That's R6.36 million a year. Just to take card payments and run a till system. I'd never actually added those two numbers together before. That was my first mistake.

The braai where everything changed

August 2024. My CFO friend Brendan,he works with larger retail groups,was at a braai at my place in Sandton. We were talking business, as you do, and he mentioned something called "direct merchant status" completely in passing. Like it was obvious. Like of course you'd have that.

I had no idea what he was talking about.

He explained it like this: companies like Yoco are Payment Facilitators,Payfacs. They sit between your business and the bank. They process your payments, take their cut (usually 2.95–3.5%), and pass the rest to you. It's a clean model for small businesses because the Payfac handles all the compliance, the setup, the risk. But you pay for that. A lot.

What Brendan had,and what most small business owners don't know exists,is a direct merchant agreement with the bank. You apply, the bank does their due diligence, and if you're processing above a certain volume, they give you a direct rate. No middleman. No Payfac margin. Just you and the acquiring bank, with rates that look a lot more like 1% than 3.5%.

I drove home from that braai thinking about it. Couldn't sleep.

The call that changed the maths

Monday morning I called Standard Bank's merchant services division. Got someone on the phone who actually knew what they were talking about. Explained our volumes. Asked what a direct merchant rate would look like on debit and cheque transactions.

They came back with 0.85%.

We had been paying 1.8% on the same transaction types. Already a negotiated rate, better than the 2.95% Yoco charges most businesses, but nowhere near what a direct bank relationship could offer.

At the time we were running around R10 million a month through our card systems across the group. The bulk of that was debit and cheque transactions. Going from 1.8% to 0.85% on that volume was a saving of just under R95,000 a month on debit/cheque alone. I did the calculation on a scrap of paper on my desk and did it again because I thought I'd made an error.

I sat in my car outside the Standard Bank branch for 20 minutes before going back inside. We had been on our previous setup for years. The calculation of what we'd overpaid in that time was not something I wanted to do right there on the kerb.

A few months later, we took one of our other businesses through the same process. This time through Nedbank. They quoted 0.65% on debit and cheque. Even better than what Standard Bank gave us, because the business profile and volumes suited Nedbank differently. That's worth knowing: the rate isn't a fixed number. It's negotiated. You should call more than one bank. The difference can be meaningful.

Why the transition took three months

It wasn't as simple as just switching. Getting a direct merchant agreement requires paperwork,financial statements, processing history, a proper application. The bank needs to assess you. It took about six weeks just to get approved.

Then there was the hardware. New terminals. New setup. And here's the part that really caught me off guard: the POS software.

Almost every POS system on the market is built assuming you're using a Payfac. The whole integration model,how the software talks to the payment terminal, how settlements work, how reconciliation happens,it's all built around that Payfac model. Loyverse. Square. Most of them. When you go direct-to-bank, the integration layer is completely different.

We couldn't find a ready-made solution that worked cleanly with our new setup. So we started building one internally. Just for our own use, initially. Something that would handle our floor management, our inventory, our reporting,and integrate properly with direct bank settlement.

Three months after that braai conversation, we were live on the new system. Total savings on the first full month: R363,000 in fees plus no more R70k Loyverse bill. Net saving: R433,000 in month one.

That felt surreal. Like finding money in an old jacket pocket, except it was an enormous amount of money and it had been disappearing every month for years.

The bigger problem we found

Once we were through the transition, I started talking to other business owners. Friends, suppliers, people I knew from industry events. I'd ask the same question: "What are you paying for card processing?"

Almost every answer was somewhere between 2.9% and 3.5%. Yoco. iKhokha. SumUp. The Payfac model, across the board.

A few of them were doing similar volumes to us,or not far off. None of them knew that direct merchant agreements existed. Not one. And it's not like they were unsophisticated people. These were proper business owners, running serious operations. The information just wasn't out there.

Here's why: banks don't really advertise this. Their retail branches don't lead with it. And the Payfac companies,Yoco, iKhokha,have very good marketing and very easy onboarding. Of course they do. That's their business model. They're not going to wave a sign saying "hey, once you're big enough, you should stop using us."

The result is a huge information gap. Growing businesses keep paying Payfac rates long after they've grown past the point where the direct model becomes better value. Not because the option doesn't exist,but because nobody told them.

From internal tool to product

Three people asked to use our software in the first two months after we built it. Then six more. All of them business owners who'd heard about what we'd done and wanted the same setup.

That was the moment I realised this shouldn't just be our internal tool. If we'd been burning R6.3M a year without knowing there was another way,and if that was true for dozens, probably hundreds of businesses around the country,then the least we could do was package what we'd built and make it available.

Nexo started from that. The mission is actually quite simple: give growing South African businesses access to the same payment rates that large retailers have always had. And give them software that's actually built for the way those payment integrations work.

We're not trying to be the easiest option for someone just starting out. Yoco is genuinely fine for that stage. What we're for is the business that's grown past "easy onboarding" and needs to start thinking about what their fees are actually costing them.

What we're offering now

Nexo is available to any South African business. The NEXO Plan at R499/month covers the core POS features most businesses need. The PRO Plan at R750/month adds multi-location management, advanced reporting, and the full direct bank integration layer.

We'll also help you navigate the direct merchant application with your bank. It's not complicated,but it does require someone who's been through it before to make it smooth.

If you're processing serious card volume right now, there's a good chance you're paying more than you need to. The calculator on our savings page will show you exactly what the difference looks like for your numbers. It takes about 90 seconds.

I wish someone had shown me that calculator three years earlier.