14 Jun.
Global payments company Visa, which bought SA’s Fundamo for $110 million this week, is taking aim at the massive unbanked market in emerging markets.
Bill Gajda, head of global mobile product at Visa Incorporated, told I-Net Bridge/BusinessLIVE in an interview on Friday there are now two billion people in emerging markets with no access to banking services, yet there is ready access to cellphones.
So the solution is to have the ability to tap into this opportunity via mobile electronic payments and services technology and support, which is what the Fundamo deal provides.
Chief operating officer for Fundamo is Aletha Ling says her company spotted this trend early and is now well ahead of the curve when it comes to electronic wallets and accounting back end functionality.
“Fundamo has been focusing on providing financial services on mobile phones for ten years. In 2000 we thought what would be the most pervasive device used by consumers and it was clear it was likely to be mobile phones,” she says.
Privately held, Cape Town-based Fundamo has more than 50 active mobile financial services deployments across more than 40 countries, including 27 countries in Africa, Asia and the Middle East.
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.
SA is very important for Visa in terms of its grand plans. Gajda intends keeping Fundamo based in Cape Town, but to expand that office and also establish offices in other areas, including a potential office in Johannesburg.
He also says Visa will tap into and try and expand the existing African network.
Notable the move should add more connectivity and change value propositions.
Gajda expects large banks to be some of the biggest customers, with Visa and Fundamo providing these banks with a roadmap.
Mobile operators will also be better able to focus on their core business.
The kinds of transactions will become much broader, so revenue opportunities for banks or mobile operators are going to expand, says Gajda.
We can apply economies of scale by managing centrally, he explains.
The future looks exceedingly bright for early adopters of electronic payment and service providers as we are really seeing take off, according to Gajda.
While massive companies like Google and Citi are also making large moves into this arena, it is mainly in the developed world.
They are not really in emerging markets, so for us the competition is cash, says Gajda.
Ninety-five percent of consumer expenditures in emerging markets are cash based, which Gajda says is too manually intensive and time consuming and thus saps productivity.
The answer is to enable consumers to be able to top up and make utility payments and send money to families, which in turn increases productivity.
While many mobile operators were quite instrumental in early provision of these services, in the last few years banks have become interested in mobile opportunities.
Visa’s major competitor Mastercard has made some inroads in Latin America in the mobile space via Telefonica as well, so competition is clearly on the rise on all fronts. However, the Fundamo deal is a bold one, which gives Visa some significant advantages in Africa.
Source: TimesLive
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