Visa Inc.’s acquisition of Fundamo will help it use mobile payments to serve more underbanked consumers abroad, according to the card network, which on June 9 announced a deal in which is will pay about $110 million for the Cape Town, South Africa-based mobile payments company.
The deal was set to close on June 9 (
Visa also signed a new agreement with United Kingdom-based vendor Monitise PLC to further develop services for person-to-person payments, transaction alerts and marketing offers.
In the past, Visa executives have said the company’s sheer size will help drive the expansion of mobile-payments services, which require significant adoption by banks, consumers and merchants.
The Fundamo acquisition is an effort to widen the scale of mobile payments services, Visa said.
“There has been a lot of pioneering, and the [payments] industry is starting to get worried about the scalability, the reliability, of these companies as they become big in payments,” said Bill Gajda, Visa’s head of global mobile products. “We think Visa coming in, in the way that we have, is going to be a signal of confidence that this is real.”
The technology company works with retail banks and mobile-network operators to enable users to deposit cash into a mobile wallet, withdraw that cash and manage accounts through basic cellphones.
Visa has been speaking to Fundamo for about three months, Gajda said. Visa plans to integrate the Fundamo platform into its payment network by the beginning of next year.
Visa, which faces competition from other payment networks as well as new entrants like Google Inc. and Isis, a joint venture of AT&T Inc., T-Mobile USA and Verizon Wireless, has been pushing to expand its mobile payments capabilities.
In May, Visa announced plans to offer a digital wallet service this fall with several card issuers (
“We are going to start seeing, on the international front at least, a bigger utilization of the mobile platform and an overlay of the Visa account structure in order to allow those transactions to happen,” said Adil Moussa, a senior analyst with Aite Group LLC in Boston. “Nobody really had any solid plan yet, so everybody has been waiting to see what everybody else is doing.”
Fundamo is in talks with several U.S. retail banks to bring its technology to the U.S., Gajda said. “[But] there is no road map,” he said.
Visa, which owns 14% of Monitise, said the new agreement will also focus on the development of mobile services in the U.S. and other countries. For domestic clients, Visa plans to work with Monitise to release a new mobile banking service for users of Visa’s debit and prepaid processing platform.
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