Orange Money nears critical mass in Cote d’Ivoire and will launch in all African territories by end 2010
Last week Orange announced that its Orange Money service had been rolled out in three new countries (Madagascar, Mali and Senegal) and that it will be operational in all of its African territories by the end of the year. Russell Southwood spoke to Philippe Millet who was appointed to head up the operation earlier this year.
The development of M-money services in Africa seemed to get going in fits and starts. Although M-Pesa took a year to get a critical mass of users, its rise has been so stratospheric that it has overshadowed most of the newcomers, including its own roll-out in neighbouring Tanzania with Vodacom.
But this week MTN announced that its MobileMoney service had 890,000 users and that it expected to reach 2 million users by the end of this year. In other words, MTN has reached a critical mass of users and the effects of network growth will begin to take over.
M-money services represent two things for mobile operators: the chance to add to their revenues and as a way of differentiating themselves in the market. Safaricom’s latest figures (see On the Money below) show that it got KS5.1 billion (US$61 million) from operating the service, a handy sum in a time of shrinking ARPUs. Last week Millicom International Cellular’s CEO Mikael Grahne cited money transfers, banking and insurance as the new services it would introduce to counter Bharti’s takeover of Zain.
Against this backdrop, Orange has been rolling out Orange Money in its territories with some speed. Cote d’Ivoire launched over a year ago followed by Senegal (early May), Mali (mid May) and Madagascar (a couple of weeks ago to compete with Telma’s Mvola service). According to Philippe Millet, it will go live in all of Orange’s territories by the end of the year. After one year’s operation in Cote d’Ivoire Millet thinks that with 250,000 users it is close to reaching critical mass.
Because of the complex regulatory issues, the service in Cote d’Ivoire is operated jointly with a bank and has been authorised by the Government’s Central Bank. The bank in question is BNP in West Africa but it may use other banks in other parts of Africa. The service requires customers to give (and have proof of) their name and address to meet KYC rules.
The maximum amount a customer sends varies depending on local regulations in each country but is usually a few hundred FCFAs. There is no set-up fee for the customer and when the money hits their account they can use it immediately. According to Millet, some customers just use the account as a safe place to put their money.
It charges a low percentage transaction fee for transfers and again this varies by country. It has all the features of M- money services elsewhere and additional will be added over time. In practical terms, the service is operated from a USSD menu which is very similar to the airtime top-up routine.
So what are the issues in getting the service to a level where it is widely used?:”There’s a number of factors. It’s money, not airtime, so the customers want to be sure they can trust the service and they want to do this by testing the service. You need first to enrol customers in the city and they will convince their relations in the rural areas to use the service. To do this, you need a critical mass of users of at least a few hundred thousand.” Orange sees the potential as being the total mobile market and that the service may itself increase the company’s level of penetration in a market.
But how will different services succeed in a single market with many players?:”The number of players and exact permutations in each country will differ. Eventually you may get 2-3 players. There’s already many organisations like banks and Post Offices offering versions of this service in some countries and some operators are already doing it in some countries. The difference with Orange Money is that we give you an account.”
Will it reach a point where inter-operability between different operator products is desirable?:”We have to see what the competitive environment is first. But there will be a need to be inter-operability to some degree and it’s something we’re working on. There’s stuff that needs to be done between the telcos and the banks and it’s more complicated (than interconnecting operators’ voice and data services). It will happen.”
“We’re also working on regional and international transfers and that’s coming up. We’re looking at several ways of doing with the customer charging to Orange and third party partners.”
If MTN’s MobileMoney has a 16% share of its total subscriber base in Uganda, then the overall potential of M-money services will run into the tens and hundreds of millions within 3-5 years.
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Issue No 506: SMS becomes e-mail and chat – Safaricom implements new service and others will follow shortly
In your Top Story you say that:”The only downside is that if your message is two SMSs long, you pay for two SMSs to send it but you pay nothing to receive it.”
There's another downside. In South Africa, you can send about 3000 emails or instant messages with a GPRS-enabled phone for the price of one SMS. I understand this is about bringing email to the owners of non-GPRS phones, but at what cost?
I’d rather get cheap GPRS-enabled phones into people's hands, teach them bandwidth-literacy and let them e-mail and instant message each other as cheaply as 'advantaged' users.