Zacks_Analysts' Blog : Visa Rolls Out Mobile Prepaid in Africa - Analyst Blog

Yesterday, Visa Inc. (V) announced the launch of prepaid accounts on consumers’ mobile phones, taking the electronic payment processing to a new scale in Africa. This is an effort to  tap the unbanked or under-banked markets in Africa.



This offering comes after the acquisition of Fundamo in Africa that Visa initiated in June this year for $110 million. Fundamo is a South Africa-based leading software maker for mobile banking services in more than 40 countries, most of which are developing nations.



With more than 5 million registered subscribers, Fundamo has a strong capacity to reach out to more than 180 million consumers in the long run, thereby amplifying Visa’s growth prospects in the rapidly developing and emerging mobile banking business.



Hence, with the help of Fundamo, Visa has created its first mobile payment platform that is globally interoperable. This new platform can now connect the existing mobile money services with VisaNet – Visa’s global payment network.



Using this platform, Visa has announced its intention to collaborate with a leading telecommunication operator in Africa and Mid East – MTN Group – to offer secure mobile money transfers, global remittances and other purchases to MTN Mobile Money consumers across the MTN markets. Initially, the new collaborative move will be launched in Nigeria and Uganda. Overall, the new product will be introduced to 5.7 million MTN users in about 12 countries.



Of late, mobile banking has come up with a profound scope of providing the consumers with a convenient, user-friendly, value-for money, transparent and secure mode of making transactions, which include person-to-person payments, bill payments, adding cell phone minutes and other banking services.



Currently, Visa is in negotiations with a number of global mobile network operators, primarily in the emerging markets, of which MTN Group is one such entity.



These initiatives are expected to increase customer interaction by using real-time, digital alerts that are customized based on the user's location and purchase history. This is also aimed at increasing brand loyalty while adding an incremental revenue stream, given the regulatory cloud that burst over Visa’s primary debit interchange fee in mid-2011.



Overall, Visa is making vigorous attempts to augment its core processing capabilities and maintain its competitive position, primarily against rival MasterCard Inc. (MA), in an increasingly complex payments environment, primarily through strategic technology acquisitions and product innovation. The earlier digital wallet initiative, the CyberSource, Monitise and PlaySpan acquisitions, further reflect Visa’s endeavor to adapt to the emerging industry trends.