Expanding its presence through mobile commerce, yesterday Visa Inc. (V) acquired Fundamo, a South-Africa based leading software maker for mobile banking services in more than 40 countries, in an all-cash deal of $110 million. The transaction is expected to be marginally dilutive to the fiscal 2011 earnings that end on September 30.
With more than 5 million registered subscribers, Fundamo has a strong capacity to reach out to more than 180 million consumers over the long run, thereby amplifying Visa’s growth prospects in the rapidly developing and emerging mobile banking business.
Meanwhile, Visa concurrently also announced a long-term trade alliance with a UK mobile software maker, Monitise plc, to enhance the delivery of mobile financial services to Visa account holders through banks. This effort will enable Visa to tap the markets outside US, whereby Monitise’s expertise of customizing mobile applications can be well complemented with Visa’s initiative of providing a new suite of payment methods for its consumers.
Additionally, both Monitise and Visa are also planning to launch a mobile banking solution in the US for clients of Visa DPS, Visa’s debit and prepaid processing platform.
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 includes person-to-person payments, bill payments, adding cell phone minutes and other banking services.
Currently, Visa is in negotiation with a number of global mobile network operators, primarily in the emerging markets. 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, particularly, given the regulatory cloud ready to burst over Visa’s primary debit interchange fee.
Overall, Visa is making vigorous attempts to augment its core processing capabilities and maintain its competitive position, primarily against MasterCard Inc. (MA), in an increasingly complex payments environment, primarily through the strategic technology acquisitions and product innovation. The recent digital wallet initiative, the CyberSource and PlaySpan acquisitions, further reflect Visa’s endeavours to adapt itself to the emerging industry trends.
