Wave, the blue tornado that is making its mark in mobile payment in West Africa

In the war between mobile payment operators in Africa, color matters. In Abidjan, behind the gate of her orange and yellow shop, which signals the sale of Orange and MTN services, Mariam Coulibaly, a 35-year-old trader, is sorry: “Customers no longer stop, because my storefront has no blue, nor the penguin with the penguin”, the emblems of Wave now ubiquitous in the streets of the Ivorian economic capital. “It’s been over a month since I applied for approval, but I still haven’t received anything, continues the saleswoman, annoyed. They tell me they are overwhelmed. “

The start-up created a decade ago by two Americans – Drew Durbin and Lincoln Quirk – arrived in Côte d’Ivoire in April 2021. In six months, she has already carved out a niche in the market, judging by the “Buzz” that its arrival arouses and worried comments held in private by some of its competitors (not listed on the stock exchange, it does not communicate figures).

Taking the opposite view of the complex tariff schedules of the incumbent operators, the company has distinguished itself by offering its customers free deposit and withdrawal operations, as well as a fixed rate of 1% on national transfers.

“The bubbling fintech ecosystem”

Orange, MTN and Moov, the three large local operators, which taxed between 3 and 10% on similar transactions, initially seemed to hesitate in the face of this blue wave. At first, they multiplied the promotional offers without lowering their prices over time. Ivorian consumers reacted on social networks by threatening to abandon their traditional operators. Between August and October, these therefore ended up aligning with the rates set up by the newcomer.

A comparable scenario took place in Senegal, where the start-up started its activities in 2018, attracted in particular by “The bubbling fintech ecosystem”, according to Coura Sène Tine, Managing Director of Wave in this West African country. The company has set up its African headquarters there and is making its hole in slashing prices, forcing Orange Money, its main competitor, to lower its prices by 80% in June 2021.

This offensive strategy first targeted people using mainly cash, such as farmers or fishermen in rural areas, before attacking urban centers. Without wishing to divulge precise figures, Coura Sène Tine affirms that approximately half of the Senegalese adult population already uses its services.

Since then, with Orange, war has been declared. The two operators have never succeeded in agreeing on a partnership, Wave finding itself thus prevented from distributing Orange telephone credit via its platform. To succeed, the start-up seized in March the telecommunications regulatory authority, which ruled in its favor.

” Slash prices “

Fintech is being talked about more and more, and not only because of these bickering spread in the public square by way of press releases. The spotlight was once again on her after a record-breaking $ 200 million fundraiser closed in September.

With leading investors in turn (the American Stripe or Founders Fund, the Partech Africa fund, etc.), Wave has now reached a valuation of 1.7 billion dollars. She thus joined the prestigious club of “unicorns” (start-up valued at more than a billion dollars), a first in French-speaking Africa.

Is Wave here to stay? “She does not bet on large amounts but on the number of transactions carried out. The strategy is to cut prices, gain market share and then diversify over the long term ”, analysis Cheikh Ndiaye, fintech consultant for the International Finance Corporation (IFC), the World Bank’s branch dedicated to the private sector.

In Côte d’Ivoire, the telecoms regulatory authority said in a statement released on October 26, “To rejoice in the competitive dynamics in this market [du mobile money] which effectively contributes to the financial inclusion of our populations, in a context marked by the fight against the high cost of living ”.

Nearly 20,000 distributors in difficulty

However, some question the viability of a model which may take years to become profitable. Others fear that the price war between operators will affect the value of the market and, in turn, weaken those who depend on it.

Thus, Abdoulaye *, manager of a multiservice store in downtown Dakar, notices that the majority of customers today request Wave services. “But it is not easy for entrepreneurs like me, because with the free service, we get less commissions, some have even had to close shop. Wave imposed itself and left us no choice », he says in one go.

“The market value has been divided by four [au Sénégal] “ since prices have fallen under pressure from Wave, also says Cheikh Tidiane Sarr, director of Orange Money Senegal. According to him, the distributors who “Do not have strong kidneys will disappear”. They are said to be nearly 20,000 in the country. And the same fears are expressed in Côte d’Ivoire, traders specializing in electronic money worried about a drop in their income.

For its part, Wave says that the increase in the volume of transactions will allow everyone to find their account. Full of ambition, the start-up, which has just launched in Mali and Uganda, now plans to develop in border transfers between the countries of the West African Economic and Monetary Union (Uemoa). A market where everything remains to be built.

And the US-Senegalese company may well not be limited to the money transfer business. “With the massive increase in the number of users, Wave has access to their data and therefore to their financial behavior. Ultimately, this could allow them to offer other services, such as digital credit, even if it means asking for a banking license ”, anticipates Cheikh Ndiaye of the IFC.

Enough to flesh out the competition with Orange, even if the subsidiaries of the French group are showing their serenity. “We have a very large ecosystem of services that has nothing to do with that of our competitors”, says Cheikh Tidiane Sarr, referring to online payment and microcredit services for which the company considers it to be one step ahead of its American rival. The battle is undoubtedly only beginning.