Visa trekked into Africa today when it announced it’s acquisition of Fundamo, an Enterprise Mobile Financial Services platform for mobile network operators and financial institutions in developing economies. The acquisition comes at a time when Visa is attempting to grow its technology-enabled payments business — the company recently announced a new global strategy, aiming to provide the next generation of payments solutions for consumers via card, computer or mobile device. Cape Town, South Africa-based Fundamo, which Visa purchased for approximately $110 million, boosts Visa’s position in the tech-enabled payments area and expands its consumer base abroad. The acquisition also gives Fundamo users, which currently total more than five million, a higher level of security when making mobile payments through Visa’s extensive network.
As the U.S. market for credit and debit cards continues to be heavily saturated, payment processors, including Visa and rival Mastercard, have increasingly been seeking growth in new areas, including mobile and the Internet. Last month, Google and Mastercard announced Google Wallet, a pay-by-phone system designed to work as an app on Android phones using MasterCard’s “PayPass” technology, which lets shoppers tap cards for payment. While mobile payment technology has had considerable success in countries such as Japan, U.S. consumers have been slow to jump on the mobile payment band wagon. In 2010, Forrester research showed that 18% of U.S. online adults expressed interest in mobile payments, but less than 6% had ever actually used any type of mobile payment.
Mass-market adoption of mobile payments in the U.S. is most likely still years away, but we are getting there. The number of merchants accepting mobile payments — and more importantly, the availability of mobile-payment equipped devices — is finally starting to expand, though it’s still in its infancy. Innovation and strategic partnerships from mobile operators, alternative payment providers, and online companies have the potential to disrupt the existing payment systems. Companies such as Boku and Zong (which both raised significant venture funding last year) and other smaller players are leading the drive towards a new standard for payments, and are most likely in the cross-hairs of hungry acquirers. We expect the focus on mobile payments, both domestically and abroad, will only continue to ignite as we head into 2H 2011 and 2012.