Transferring money, social networking and data: how mobile became essential
At the end of 2008, Orange was the first telecom operator to deploy a money transfer and mobile payment service in French-speaking Africa, in this case in Côte d’Ivoire, in order to retain customers who primarily use prepaid cards.
“In Kenya, M-Pesa has seen incredible growth after just twenty months of activity,” recalls Thierno Seck, project manager at Orange Money who is now president of Sefima Advisory Services. mobile money It responded to structural needs, particularly in relation to banking, and was part of an underlying dynamic. »
Orange then proceeded to convince its customers that its new service was secure, while contracts were signed with point-of-sale managers in its network. At this time, it is not uncommon for customers who want to make a withdrawal to have to shop due to lack of liquidity. This difficulty gradually disappeared as the markets reached a critical size.
Partnerships with Canal + and Total
From 2011, service mobile money It has reached 3 million subscribers in nine countries. While Orange initially relied on its own network, 5,000 kiosks were gradually set up in Mali as of 2014 – the country now has 25,000 kiosks. This strategy is then deployed in Guinea, Senegal and Côte d’Ivoire.
In each country, once the market reaches maturity, the operator expands its offer by providing new products and services. Partnerships were established in 2012 with Canal+ to pay bills, and then the following year with Total in twelve countries, where service stations have the advantage of getting cash. Then customers become familiar with a new gesture: mobile payment.
In Côte d’Ivoire, Orange now offers a crowdfunding platform called Orange Collecte. In Senegal, its agents travel to clients via a “cash at home” system. The group also invested in Jumia in 2016, enabling the e-commerce group to diversify its payment methods and Orange to capture a new market.
241 million euros in turnover in 2017
Ten years later, “the mission has succeeded,” says Alban Luhern, Orange Money’s director for Africa and the Middle East. The service now has 38.7 million customers in 17 countries, including 13 million monthly users. In 2017, it generated 26 billion euros in transaction value. In Burkina Faso, this amount reached 5.2 billion euros last year, which is almost half of the country’s GDP.
“Like Safaricom or MTN, Orange has been able to earn the trust of users, in part thanks to its branding, deploying a dense network and offering a simple interface,” summarizes Jean-Michel Hutt, Partner at BearingPoint. And to add: “M-Pesa was first launched in 2003, but the simplicity of the customer journey was missing at that time.”
The fact that Orange Money customers have become more loyal to the operator, which is the initial desired goal, now appears almost secondary as this service has established itself as an essential component of the activity of the French group. It generated €241 million in revenue in 2017, or 5% of Orange’s revenue in Africa and the Middle East. In some countries, this service accounts for 10-15% of the operator’s turnover, as in Côte d’Ivoire, where Orange Money has 6 million subscribers, which is more than half of the domestic market.
virtual currency issuer
This change is formalized in the same group organization. Initially, Orange Money was launched in partnership with banks that issued a currency distributed by the operator. But in 2015, the Central Bank of West African States (BCEAO) encouraged telecom companies to become issuers of virtual currency, in the context of an explosion in the market.
Orange now has an Electronic Financial Institution (EME) in seven countries. “This allows us to have a direct dialogue with the authorities and shortens the time needed to market our products, as we previously had to go through a partner,” explains Alban Lohern. Now to ensure the compliance of its operations, Orange Money has enlisted the banking skills of each EMI and set up a center of expertise in Abidjan in compliance with Orange Money, whose tools are shared. “This is an important step in our evolution, because financial services have become an essential part of our strategy,” he continues.
What about competition with banks? Historically, we addressed a section of the population without a bank account, the Orange Money manager identifies. Today, banks communicate with this population, and there is already competition in a small segment of the market, but both parties need each other. »
Banks that monitored mobile money You have the impression that you brought the wolf into the sheepfold from afar
Within the framework of partnerships, Orange Money allows movement of funds in many countries with accounts located notably in Ecobank, Bank of Africa and BNP Paribas. In Botswana, where the health services mobile money Despite the banking rate of almost 50%, the operator has been offering the Visa card since 2013. The main competitive advantage of Orange is the possession of 160,000 points of sale on the continent, when the banking institution has ten agencies in each country.
‘Banks that monitored mobile money From afar, you have the impression that you brought the wolf into the sheepfold, but this does not mean that it should be buried, explains Jean-Michel Haute. They count on powerful brands and millions of customers. They also master the financial regulation chain, have money and are not bad at it Mobile banking “Ironically, the real advantage of Orange is not technical, but rather its ability to understand the uses of rural and urban populations,” believes Yoanne Lenor, associate director at Devlhon Consulting.
Occupation of business and the informal sector
This is how Orange Money aims to become an account and offer savings, credit and insurance products. In partnership with the Premier Microfinance Agency (Aga Khan), it already launched savings and loan services in Madagascar in April, and then in Mali in June. One of its main challenges now is to improve its services to companies, in particular to obtain part of wage payments in the informal sector and agricultural work, where the use of cash is the norm. Speed, security, transparency, tax collection… are all advantages that the operator highlights.
Another crucial lever: the international transfer of funds, where Orange has come into direct competition with existing players, who have sometimes criticized it, such as Wari, in Senegal, for taking advantage of its position to put them in trouble. Wheels. In 2013, the operator established international corridors between Côte d’Ivoire, Mali and Senegal, then Niger, Burkina Faso and Guinea Bissau, with about 15 million euros in transfers per week.
Since June, Orange has offered this service between Botswana and Zimbabwe, in partnership with EcoCash. It is also found from France to Madagascar and Guinea. On the other hand, transfers to Côte d’Ivoire, Mali and Senegal were suspended at the beginning of 2017. The reason for this is that the Central Bank of West African States considered that EMI could not carry out foreign exchange transactions, prompting Orange, which has since had an agreement Official in Côte d’Ivoire and Mali to search for a partner.
Competition between telecoms companies, banks, international transport operators… the rules are still required to evolve as interoperability expands. It is expected that this convergence of services between operators mobile money Required by regulators. Orange Money’s services have already been interoperable since September 2016 with those of its competitors in Madagascar, the second African country after Tanzania to take the lead.
Thierno Seck asserts that “interoperability would be the ideal area for observing the dynamics of cooperation and also of competition between these actors.” And add: “A distinction must be made between interoperability confined to mobile money, Which regulators must impose their agenda, ranging from that to all payment solutions (cards, transfers, etc.). The latter should be based on an open and unified scheme to strengthen partnerships and leave more room for competition. So we’re just at the beginning of a beautiful story. »
Those countries that still resist
Morocco is the only country where Orange is located in Africa where the mobile money transfer and payment service is not deployed. “In the Maghreb, there is no success story in this sector, and this is undoubtedly linked to different uses and to better structuring of money transfer solutions,” sees Alban Lohern.
However, the French operator is considering developing an offering in the kingdom, and the high rate of banking is not necessarily a brake. Vodacom and MTN also ceased their broadcasting activities in 2016. mobile money In South Africa, due to a “lack of commercial viability,” noted the second, who is nevertheless considering a return.