France-based multinational operator Orange has launched a mobile money service in France, initially enabling money transfers to three countries in Africa as well as within mainland France. The move is part of Orange’s strategy to diversify and grow revenues by expanding in mobile payment and banking services. Recipients of Orange Money will be able to withdraw funds from over 30,000 points of sale in the three recipient countries. An Orange Money app will be available soon in France, and the operator plans to expand the money transfer offer from France to other countries over time. Run by Orange's subsidiary W-HA, which is authorized to issue and manage electronic money, Orange Money does not require customers to have a bank account, only a mobile number and ID.
Orange aims to compete with traditional money transfer services by offering much lower fees. Within France, all money transfers cost just €0.50. For international destinations, the costs range from €3.00 for transferring up to €100.00 to €8.00 for over €250.00 to €400.00, the maximum for a single transfer. Deposits cost €0.50, and withdrawals cost €5.00.
Mobile money services originally took off in developing economies, especially in Africa, in which a large number of customers had mobile phones but not bank accounts. Lack of access to traditional financial services ceased to be an impediment to commerce once mobile operators allowed subscribers to pay each other using funds already applied to their mobile accounts. The huge success of services such as Safaricom’s M-Pesa has encouraged operators to establish similar mobile money arrangements in other markets, but uptake of such services in developed economies has been slower, mainly because banking services are already well established there. However, first-world mobile customers are using their mobile devices heavily to access banking services; this week Bank of America reported that 62 percent of American smartphone users use mobile or online as their preferred mode of banking, up 51 percent from last year.
Orange is now trying to establish “unbanked” mobile money in a developed market, France, by using its Africa services as the thin end of the wedge: Orange Money already serves 18 million customers in 14 countries in Africa, and many Africans live in France and maintain financial relations with friends, family and associates back home. African expats in France who use Orange money for transactions back to Africa will likely also use it within France, and their use of the system may encourage French nationals to do the same. In this way, Orange may be able to establish itself as a mobile money provider in its home country.
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The Tarifica Telecom Industry Research Department