Unicorn Startup: Wave becomes first with 1%money transfer fee
Wave, an African francophone company, has added another milestone to its list of accomplishments. Wave is a financial network on a mission to make Africa the first cashless continent. In just a few years, it has evolved from an Asia and Africa-focused cheap remittance company, Sendwave to a mobile money service provider worth $1.7 billion, becoming Africa’s latest unicorn startup and the first in the French-speaking region.
This billion-dollar achievement follows a $200 million in a Series A round led by Stripe, Sequoia Heritage, a private investment fund and unit of Sequoia, Ribbit Capital, Founders Fund, and existing investors.
One fantastic piece of news is that no African business has ever been able to raise as much money in a Series A round, with Opay’s $400 million raise being the largest in the area, Interswitch following closely with a $200 million investment from Visa, and Flutterwave raising $170 million. All of these rounds were from the Series C series.
Wave Replacing Current Regime.
Senegal is one of the fastest-growing mobile money markets in Africa, according to a 2020 GSMA report. Remember that in 2015, the Central Bank of West African States (BCEAO), the shared central bank of the region’s eight francophone countries, including Senegal, permitted nonbanks to manage mobile money in its member states. This move has had a rising impact in the area since mobile money has grown in popularity since its introduction, owing to early entrants with the necessary infrastructure and user base (subscribers and cell networks) to launch the service.
Orange is Senegal’s largest mobile operator, with approximately 8 million mobile subscribers and a 50% market share. They dominate the digital financial services field by partnering with other banks, forcing third-party players to make do with a modest market share.
Wave, however, was created to lower the cost of mobile money transfers, and it entered the market in 2016 with a 70% cheaper service before entering Senegal a year later. Created by two Americans Drew Durbin and Lincoln Quirk, it offers free withdrawals and deposits through its mobile application for money transfers between individuals for a fixed transaction cost of just 1%.
Its distinct advantage or selling point is that it carries on additional costs from customers on bill payments to companies. It also offers a free QR-card for users without smartphones to use to transact with agents who can setup accounts, receive deposits, and make withdrawals, which its competitors do not.
Wave co-founder Drew Durbin stated that the app is developing a money service that is “radically affordable” in his words. They had to construct their own infrastructure, which included agent and consumer applications, an agent network, and QR cards, in order to deliver on their promise to their clients.
Their cheap transaction cost service has allowed them to dethrone industry reigning officers in the market, eat into their market share, and put the entire mobile money sector on alert. This method has managed to shake Orange in particular. They also had to reduce their costs, with bill payment fees dropping to 1% as of June 1. Following this new investment, they intend to expand their footprint in Senegal and the Ivory Coast, they are currently executing public awareness campaigns. They also plan to expand into other regulatory-friendly markets, such as Uganda and Mali and extend their 800-person workforce across product, engineering, and business. On Google PlayStore, their app has already received over 5 million downloads.
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