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From the confines of a light-blue shipping container next to a busy roundabout, Ousmane Fall runs a modest business transferring money across Senegal, with little more than his smartphone.

A red poster for Free, a telecomms provider and money transfer service, hangs outside. As does a metal sign for YUP, the recently discontinued offering from French bank Societé Générale. Another poster bears a penguin, the mascot for the Senegal-founded mobile money startup Wave, with a sky-blue background almost matching the paint of the container. It almost seems like color coordination — after all, Wave is now the only service Fall offers. Wave has begun to dominate the Senegalese market by offering lower fees to users. As rival services, including Free and Orange Money, once the market leader in mobile money, have dwindled, Fall has had to ditch them.

Before Wave came to town, Fall earned around 15,000 CFA francs ($24) per day in commissions sending money with Orange Money. He’s now making around 6,000 CFA francs per day. His predicament is the flipside of the low fees that Wave’s users love so much: they mean lower commissions for agents like Fall.

In a country long dominated by what one analyst calls Orange Money’s “abusive” rates, which could range between 5% and 10%, Wave was a hit when it launched in this West African country in 2018. Now, the four-year-old startup — backed by Silicon Valley’s Sequoia Heritage and fintech giant Stripe, among other major names — has cracked open Senegal’s mobile money market as a whole.

In a race to catch up to Wave — with its 1% fee on money transfers as well as free deposits and withdrawals — Orange Money dropped rates last year to 0.8%. While this left agents like Fall in the lurch, it’s been a massive win for users in a lower-middle-income country, where a dollar saved here or there goes a long way. The low rates have also spurred small businesses to start accepting mobile money payments, in an economy where cash is still king, leapfrogging a still-lagging adoption of credit and debit cards.

“Wave didn’t bring any new technology, per se,” said Amadou Diop, president of international firm MNS Consulting, who splits his time between Dakar and Paris and has consulted for Orange Group in the past. “What has been really important in the rise of Wave in the market was the marketing strategy: Coming up with an offer of 1% fees was really something that spread [their business] very, very fast.”

Orange Money’s initial growth in Senegal was aided by the fact that the French telecomms group Orange, through its Senegalese subsidiary Sonatel, has long been the dominant telecomms provider in the country. That gave it a leg up over home-grown money transfer initiatives like Wari and Joni Joni, which predated the launch of Orange Money, since those ventures — like many mobile money operators — use basic USSD technology for their transactions. But the USSD system uses SMS services to send and encrypt data, meaning Wari and Joni Joni were reliant on buying wholesale USSD capacity from telecomms operators. With Orange being the biggest telecomms provider in Senegal, mobile money operators had to go through them as a middle man. And Orange’s dominance of the existing telecomms sector then gave it a structural advantage when it introduced Orange Money to Senegal in 2011. Orange’s subsequent dominance of the mobile money industry also provided it with insulation from competition — leading to unfairly high pricing, analysts say.

When Wave came to town, though, it had an advantage: It could circumvent Orange’s USSD dominance with app-to-app payments. And, as a third-party app, it could pull in users from competing telecomms providers, like Free. It also distributed physical cards with QR codes for those without smartphones.

Now that Wave has broken the market wide open, the whole mobile money landscape could become far more competitive — between Wave, Orange, and future mobile money competitors. On the other hand, though, a potential future of cheap money transfers and high levels of competition is dependent on whether rates of near 1% or lower are actually sustainable.

Photo courtesy of WorldRemit Comms.