Posted on Oct 18, 2021 at 7:16 am
In the dirt streets of the suburbs of Abidjan, “mobile money” shops are omnipresent. They can be identified from afar, thanks to the colorful flags and posters that cover their storefronts, promoting the payment apps of telecom operators: Orange Money, MTN Money, Moov Money. In recent months, a newcomer has added his advertising inserts alongside those of telcos: Wave.
The mascot of this American start-up – a little penguin – is incongruous in the tropics. But the point is that its appearance – first in Senegal in the summer of 2020, then in Côte d’Ivoire this year – froze the competition. The young shoot breaks the prices. On average, the commission rate of telecom operators on “mobile money” transactions is around 3% and can rise to 10% on withdrawals of small amounts. By practicing total free withdrawals and a single rate of 1% on transfers, Wave roughly divides these prices by three.
A violent attack
This is not the first time that an actor has tried to disrupt the “mobile money” market. But after raising $ 200 million in September from several funds, including Partech and Sequoia Heritage, the risk posed by the New York start-up has become more than credible.
“Their model makes free what made 80% of our income, it is necessarily violent,” admitted Alioune Ndiaye, the boss of Orange Africa, in response to a question asked by the employees of the group. “Our response must be swift and effective. We have to change our economic model. We no longer have a choice. The model that charges the customer for withdrawing their money cannot live long. We have to adapt our prices accordingly. Orange has already aligned itself with Wave in Senegal, it has just decided to do so in Ivory Coast.
One billion in 2025
For Orange, it’s an earthquake. The group’s mobile payment solution, born in 2008 on the model of the Kenyan M-Pesa, has become a pillar of the operator’s African activities. Last year, Orange Money generated more than 500 million euros in turnover – nearly 10% of income in the region – with a profitability similar to that of the telecoms activities. In sub-Saharan Africa, where banking rates remain low, the enthusiasm for these dematerialized payment solutions accessible to any holder of a mobile phone is not waning. To the point that Orange intended to double the income it derives from it by 2025.
“The objective of reaching 1 billion euros in turnover with mobile financial services in 2025 is not in question,” assures Stéphane Richard, the group’s CEO. Until now the dynamic has been continuous, with 25 to 50% growth per year. It will be more complicated with the arrival of new players like Wave, but we have resources. And we launched Orange Bank in Africa, which will be a relay to our mobile finance activity. “
The tricolor group mainly relies on the collapse of prices caused by Wave to convince more Africans to switch to mobile payment. Currently, the group claims 50 million Orange Money customers, against more than 130 million for its mobile telephone services. At the management of Orange Africa, we are therefore reassured: the increase in transaction volumes could more than offset the decrease in rates.