Commentary: Major Mobile Moves for Visa

Visa’s recent acquisition push has brought the payments network giant a range of interesting assets, from merchant processing solutions, mobile and social media properties to technology solutions. However, Visa’s most recent acquisition, Fundamo of South Africa, may have the most interesting potential to influence the direction of global mobile payments, given its focus on using mobile technology to bring financial services solutions to the hundreds of millions of mass market customers in emerging markets.

“Fundamo will now have access to more resources and expertise, something that had previously constrained us,” said a Fundamo spokesperson. “With Visa we will also gain access to a larger market which will open up new opportunities to develop and deliver mobile financial services for consumers and merchants that have the same security, reliability and convenience of Visa on a global scale.”

Emerging markets in South Asia, Africa and Latin America have faced a host of infrastructure, capital and technology challenges in moving beyond cash payments. And despite the early promise of mobile payment solutions like M-PESA and a range of mobile remittance solutions, like the SMART remittance service from Philippine telco operator, no one has yet “cracked the code” on providing a broad set of mobile payments and financial services offerings on a global basis. Most solutions that have seen any success have been narrowly focused, single-purpose applicants that work in a limited geographic footprint. By contrast, both Visa and Fundamo have proven cross-border operating models that are interoperable and include multiple service offerings.

“The model will scale more than tenfold and will enable us to reach markets never before possible, with more than 2 billion people in the world who have a mobile phone but no formal banking relationship, so the opportunity is enormous,” said a Fundamo spokesperson when asked about the how model will scale to as it builds from where the company is today.

The Visa acquisition of Fundamo clearly indicates a long-term interest in serving global emerging markets by leveraging innovative technology solutions. Visa paid approximately $110 million for the privately-held, Capetown-based Fundamo. Although smaller than some of Visa’s other recent, high-profile deals, Fundamo boasts an impressive track record in the tough world of emerging market payments. Operating in 40 countries in Africa, Asia and the Middle East, Fundamo has managed to acquire 5 million consumers and partner with a broad range of mobile carriers. And although there are a range of solution providers worldwide who boast newer, possibly technologically superior solutions, no single technology provider to date has built broader processing coverage.

“The pressure on management, time and organisational capacity to not only integrate into Visa, but also grow will be high,” said a Fundamo spokesperson with regards to the biggest challenges the group faces in expanding. “Fortunately, the integration process is well-planned and resourced.”

Emerging markets payments expert Brian Le Sar of Johannesberg said, “perhaps Visa’s play will help sort out common standards and make solutions [like this] more ubiquitous.” Le Sar, who helped provide payments expertise throughout Africa during his days with Standard Bank of South Africa, added, “they seem to have found a technology model that has some applicability across countries and regions and works for a variety of different operators and other players, which is pretty unique. Five million customers is a lot, given the challenges and what I presume has been a low-level of capital investment.”

What will be interesting to see is how this Visa acquisition aligns with existing Visa mobile initiatives around mobile NFC payments in the United States, particularly a much publicized joint venture with Monitise, State Bank of India and Elavon. On the same day as the Fundamo acquisition announcement, Visa announced plans to offer a new U.S. mobile banking solution to Visa DPS debit and prepaid clients, signaling more aggressive mobile efforts geared toward underserved/underbanked U.S. customers as well.

In terms of establishing a truly influential mobile solution – a combination of a strong U.S. value proposition and a global platform for interoperability and cooperation with mobile carriers – this combination of players has real potential.


Margaret is a Managing Director at Market Platform Dynamics and experienced payments industry executive with a proven track record of commercializing new technologies in small start-ups, and large multi-national corporations. Read More