Visa to Increase Stake in Monitise – Analyst Blog

Visa Inc. (V) has announced that it will increase its stake in London-based Monitise plc to 14.4% by investing £6.6 million.

 

British mobile banking and payments service provider Monitise is planning to raise a total of £32.4 million. Out of this, £26.6 million will be collected from issuing shares at a price of 20.75 pence each, £6.6 million will come from Visa and £2.1 million will be raised from First Eastern Ltd.

 

Monitise also announced that it is extending the agreement with Visa by one more year to 2015. Besides, the fees payable to Monitise by Visa have been increased to $16 million from $13 million as per the original agreement.

 

During June last year, Visa made a $13 million of minority equity investment in Monitise by signing a five-year strategic partnership called the “Global Alliance Agreement”. The agreement was to develop technology to provide SMS alerts and secure payment mechanism to Visa’s 2 billion cardholders worldwide.

 

Accordingly, Visa is building up an efficient technology platform through the financial service providers around the world. This would help to speed up and deliver well-organized mobile banking services such as bill payment, banking, mass transit ticketing, mobile top-up and others.

 

Over the past two years, the company has prudently allied with various financial institutions, mobile network operators and technology providers in order to smoothen and commercialize the mobile banking services for an enhanced consumer-base across the globe. Through such partnerships, Visa seeks the potential to pool in more than a billion mobile consumers into its financial stream, particularly those who did not use mobile financial services previously.

 

The partnership furthers Visa’s expansion strategies as Monitise has already been successfully delivering secure mobile banking and payment services to over 2 million registered users through more than 200 banks and financial institutions across the U.K. and the U.S. It is also expected to result in a modal shift of about $700 billion of consumer spending from cash to electronic payment.

 

Overall, we believe that the Visa−Monitise JV will be potent enough to take the mobile banking services a step further, thereby expanding payment volumes by providing a user-friendly and secure technology to its subscribers.