From my assessment, OPAY is most likely one of the greatest disruptions that will happen in Nigerian ICT, e-commerce, e-services, and Banking industry. The company is driving this disruption through Business Model Innovation.
Let’s look at Oride, for example.
70% of people that use okada in Nigeria fall into the middle and the low class in terms of their average income. Luxury means little or nothing to this market segment, especially when it’s going to cost more than what they have always known. This is simply because they earn just enough to survive and have little to spare on luxury. Thus, it will be difficult for them to use premium okada (motorbike) services.
Also, this class of people wouldn’t naturally put the money they do not have in Opay’s wallet, thereby will not naturally use the Opay services.
Understanding the characteristics of this market, Opay decided to subsidize the Oride cost. That way, this segment will be able to use Oride (cheaper than what they have been paying). However, to enjoy the discount, they have to create an Opay account and have money in their wallet, thereby technically forcing them to use Oride and Opay Wallet.
How does Opay make their money?
Exactly the same way banks make their money – collect as much cash deposits as possible and invest them in either high or low-risk investment platforms.
Now, here’s the deal: As long as people want to enjoy the discount on Oride and continue to use Oride, they will have to have money in their Opay wallets. That means more deposits for Opay, which can further be invested, hence boosting the Opay business.
The implication is also that Oride and other Opay services, like Ofood, loans, Obus etc., are not just threats to the Okada, food and car businesses, but also to banks. Why would I leave my money in the bank when I can have it in Opay wallet to use it without stress?
I expect Opay to start a form of money savings services and provide opportunities for investment on their platforms. That way, you will have little or no reason to leave your money in the bank.
As Opay and other services grow, I see them becoming a big threat to banks.
Will Opay continue the discount forever?
I do not think so. The current discount enjoyed on Oride and other Opay services is a market penetration strategy, not necessarily to crush their competitors (Gokada and Max), but to also re-engineer the mind of the middle and low income earners to the luxury and convenience that their services provide.
Once the mind of this populace is fully conditioned to enjoying the luxury, Opay can now gradually lift the discount without the fear of losing their loyal customers.
What is OPAY’s next Innovation?
At the moment, all you need to create an account with OPAY is just your phone number, and maybe a bank account. The inter wallet funds transfer feature is a brilliant innovation that made it possible for even people without bank account to use OPay. As Opay and their services become more popular, I see these services becoming more valuable, such that, one will not need to use ATM or even bank to withdraw. With your phone, you can simply transfer money to another person’s OPay wallet and take cash from him or her, thereby making cash withdrawal seamless.
I also expect Opay to integrate USSD code in the nearest future, where you do not need to own a smartphone or download their mobile app to create an account and transfer money into your wallet.
As I mentioned, sooner, Opay will also begin to give interest to some set of customers, thereby creating a platform for a form of savings account, just like banks.
It may not also be too long before you will be able to start receiving foreign currencies and even crypto currencies on Opay.
These guys are up to something big and, sincerely, I wish them all the best .
NB: These are my thought, feel free to drop your own opinion in the comment box.