Visa Going Mobile With Fundamo Deal

Visa recently announced the acquisition of Fundamo, which is a leading provider of mobile financial services for financial institutions and mobile network providers in developing countries. According to Visa, the acquisition will help it to provide the next generation of payments solutions. Visa also announced a long-term commercial agreement with the U.K.’s Monitise, a leading provider of mobile money solutions for financial institutions in more developed geographies. ^[1] Visa is the largest provider of payment card networks in the world and competes with MasterCard, American Express, Discover and Capital One.

We have a price estimate of $86 on Visa’s stock, which is about 15% above the current market price.

Fundamo at a Glance

Fundamo’s mobile financial services platform enables the delivery of mobile financial services to unbanked and under-banked consumers around the world, including person-to-person payment, airtime top-up, bill payment and branchless banking services.

Visa can leverage Fundamo’s platform to offer enhanced functionality and new services to existing mobile financial services subscribers across Africa, Asia and Latin America and has the potential to rapidly expand its subscriber base. According to Visa, Fundamo’s deployments currently have a base of more than five million registered subscribers and the potential to reach more than 180 million consumers with mobile financial services. The acquisition will cost Visa approximately $110 million in cash.

Monitise Agreement

Monitise has expertise in customizing mobile applications for a broad range of phone models and operating systems which will help Visa to expand its presence in the mobile financial services. Visa and Monitise also plan to introduce new mobile services for existing Visa account holders outside the US that will enable electronic payments including mobile top-up, utility bills payments and transit ticketing.

The mobile payment market is growing rapidly and Visa is expected to play a dominant role because of its recent strategic acquisitions that will enhance its core payment processing capabilities. The acquisition of Fundamo along with CyberSource and PlaySpan will help Visa to boost its number of processed transactions from around 47.6 billion in 2010 to about just under 90 billion by the end of our forecast period.

In the chart above you can drag the trend line to see how this forecast impact’s Visa’s price estimate.

See our full analysis of Visa

Notes:

1. Visa Acquires Fundamo, Signs New Agreement with Monitise, Press Release [↩]

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