Société Générale has failed to keep Yup, its mobile money solution, afloat

The information was leaked in early March and quickly spread, first on Senegalese and Cameroonian news sites, leaving disillusioned customers and observers of the small West African financial community stunned.

Société Générale has put an end to the adventure of Yup at the end of March, the mobile payment solution it launched five years ago in partnership with the banking software publisher TagPay. This is the end of a dream for the 100 or so employees in the seven countries (Cameroon, Senegal, Côte d’Ivoire, Ghana, Burkina Faso, Guinea and Madagascar) where the solution operated.

However, the banking group claimed to have over two million customers in 2020, i.e. double its initial target by that date. The solution had been particularly successful in Côte d’Ivoire and Cameroon, its two main markets. Côte d’Ivoire had more than 3,500 points of sale, two years after the launch in 2019.

By the end of 2021, this figure had doubled. As for Cameroon, no less than 5,000 Yup distributors were eventually set up, while the initial target for all eight of the company’s markets was 8,000 sales outlets.

Compliance standards

However, the reality behind these figures is quite different. First, the active customer portfolio consisted of only one million accounts. Secondly, in terms of profitability, although Société Générale targeted a “significant” profitability threshold to justify the €20m ($21m) that the French holding company had invested to develop this service, it was never reached.

The arrival of new competitors caused a very sharp drop in prices that we could not anticipate.

“This would have required a critical size of over five million customers,” says a group executive who prefers to remain anonymous. “The deficit was significant and structural, which is what led us to make this decision,” says Philippe Amestoy, the group’s deputy director of international banking networks, Africa, the Mediterranean basin and overseas regions, though he didn’t give any figures.

He explains the reasons for this failure. “Two things became clear to us: we did not want to compromise our compliance standards. In addition, the arrival of new competitors caused a very sharp drop in prices that we could not anticipate,” he says. As a matter of fact, with regard to the first finding, Société Générale had decided to make Yup a fully-fledged subsidiary that operated as an e-money issuing and distribution company. As such, it was subject to the regulations applicable to banks, in particular, the famous KYC (Know Your Customer).

The procedure that allows a bank to identify a customer is actually quite demanding. It involves checking data against anti-money laundering and anti-corruption laws, establishing a credit risk profile, etc., whereas Yup’s competitors, such as Orange Money (the Orange telecoms group’s money transfer and mobile payment service) are considered simple operators and therefore not subject to banking regulations.

Competition from Wave, the price breaker

Besides, the main argument for the French financial institution, which recorded a net result in 2021 (that rose sharply to €5.6bn and is established in 19 African countries), remains the competition,  and that is, to hear the ‘Wave wave’, which took hold of the continent in 2020. Wave, the US-Senegalese start-up specialising in low-cost transactions, has reduced prices so much that it has also undermined Orange. The French group’s efforts on both prices and volumes have clearly not been enough to stop the hemorrhage.

Despite everything, Société Générale does not intend to totally abandon this niche. This is despite the failure of Yup, which comes after the lack of success of Manko, its banking concept geared towards the African informal sector, two years ago. “The need still exists. We will think about how to distribute this type of service, not necessarily in the form of in-house products, but rather as part of our open-banking strategy,” says Amestoy.