Opera controls OPay, and from Opera’s earnings call, “In December OPay processed a gross transaction value of $2 billion on its platform compared to $1.4 billion in October, or a 43% increase in just over two months. Further, OPay’s revenue is increasing quite rapidly while the company is able to achieve profits right around breakeven despite the growth. We expect this growth to continue as OPay continues to scale in Nigeria and expands to an additional country in Africa.” Yes, OPay, the fintech company, which has Nigeria as its main base grossed $2 billion on transaction value in December 2020, hitting 43% growth from October numbers.
Simply, OPay is Nigeria’s biggest mobile payment solutions provider and you can call it the fastest growing customer brand in any sector in Nigeria. The OPay’s Invisible Layer Strategy is working at scale.
People, marginal cost of zero has come to the paytech sub-sector of Nigeria’s fintech sector. Yes, OPay is running what I call the Invisible Layer Strategy. The Invisible Layer Strategy is a strategy where a company builds a product utilizing critical infrastructure of another competing company, in the same product line, but finds a way to under-cut that company on cost of services to end users. Today, OPay offers zero fee to customers who use it to pay for DStv services in Nigeria. It utilizes and relies on Nigeria’s banking infrastructure. But if the same customers use banks, directly, they would be charged fees, by banks. Largely, OPay has invented an invisible layer which makes it possible to handle those payments at zero cost that even the banks themselves cannot do. It is important to note that OPay is not absorbing any cost to acquire customers; there is no cost whatsoever in the value chain, and that means even in the long-run, it can process payments in Nigeria at absolute zero fee.
OPay is now well positioned to even battle telcos if they decide to come into the mobile money domain at scale. This company has provided a textbook case study on how to win consumers in Nigeria: pile losses and keep making losses and keep running losses. One day, everyone will come to your party. Of course, you need reserves, tons of reserves I must note, to run that playbook. Hey, China Unlimited makes everything look easy.
Nigeria is now an OPay nation! By operating at the edges of the smiling curve, they have a promise to capture huge value.
Interestingly, this could become one of the most dominant financial institutions in Nigeria, and Iniabasi Akpan, the Country Manager, explained it clearly. Yet, there is more room to grow: Nigeria’s consumer GTV is estimated at $301 billion and more than 80% of that remains out of digital networks, and that means, there are lots of values to be pursued and captured as digital transformation happens. You may then ask – did Paystack exit very early? But you need to understand that $200 million is a lot of money in Nigeria!
“Due to the visible brand of ORide – including its iconic green helmets – and its frequent everyday use, many customers gradually gained an impression that OPay is a ride-hailing company. We just want to take the time today to clarify and emphasise that OPay was and remains a payment and financial service company – a Payments Fintech. Our businesses are licensed and regulated by Central Bank of Nigeria – like any established financial institutions – and OPay is today one of the leading Fintechs in Nigeria.”
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