The Opay Double Clip

Andrew Miracle
Nov 7 · 3 min read
Screenshot of Opay Message about Fees Policy

OPay is facing its first-ever backlash from customers. On Tuesday, November 05, users found out they had to pay a 2% charge for transferring money to other banks, at a small rate of N15 per transaction. OPay apologized for not communicating the increased fees to its customers. The company then revised the fee to N45 for the first transaction a user makes in a day, while later transactions will incur a flat 1% processing fee. (TC Daily). The 1% was after a revolt by the believers; the company had set it at 2%. At 1%, every bank in Nigeria at our regular N52 flat fee offers better value.

Apparently, this redesign is actually good news in the ecosystem. This validates one thing — OPay is not doing magic by making costs to disappear. You could have imagined that this Opay was not under the gravity of high cost of doing business in Nigeria with the subsidized rides on ORide, OBus and OTrike.

Why the backlash ?

Given the economic and business landscape of Nigeria, any playbook that depends on attracting users with freebies and expecting a paid conversion without a new level of product evolution will fail in Nigeria. So, OPay can decide to burn their $50 million battle ramp, and the day that money runs out, all the users will look for the next deal in town. There is nothing like lock-in in Nigeria because one of the hardest things is to get a Nigerian to spend money!

If we then decide to look at this from a product perspective, ask yourself, could Opay be using these fees to deepen intra-Wallet transactions where everything stays in its ecosystems? In other words, provided no one is transferring outside the Wallet, users will not incur any costs.

The truth is that the idea of free stuff is in-existent! Some people pay the bills for others to use those platforms for ‘free’; that’s the business model at play on Facebook, Twitter, Instagram, etc. When you remove the advertisers who bankroll these entities, they will close down, you don’t spend millions of dollars to offer free services; that’s madness! Opay’s situation poses a unique challenge in an ecosystem where there are other competitors and a plethora of fintech solutions to choose from in Nigeria

One key takeaway from this is that you cannot expect to run a successful enterprise on lies, at some point, you will burn out cash, and everything will collapse! No business is easy within the Nigeria ecosystem, users and consumers may shout as much as they want, but it’s your responsibility to be realistic and charge what covers your operating costs, with some marginal profit; to believe otherwise is delusional.

Let’s hope that at no point all these ‘O families’ will begin to disappear, but we can be sure that the party is over, and the day is bright.

Andrew Miracle

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I write about a lot of things, from tech, business, teams, book reviews and startup stories.

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