By Andrew R. Johnson
Visa Inc. (V) is ramping up technology in countries where
consumers are more likely to send money and pay for purchases by
sending a text message rather than swiping a plastic card.
The Foster City, Calif.-based company, seeking to expand further
overseas, said Wednesday it is offering a platform that can speed
up the development of so-called mobile-money programs that are
commonly offered in developing markets by telecommunications firms
and financial institutions.
Such programs are typically targeted at consumers underserved by
traditional banking products and allow customers to transfer money,
load and withdraw cash, pay bills and perform other transactions
through basic cellphones.
The first clients using Visa's platform, through which the
company will host and manage programs on its own data centers, are
telco Aircel Ltd., Bank of Kigali Ltd. (BOK.RW) and Urwego
Opportunity Bank. Aircel is offering its mobile subscribers in
India a virtual account that is tied to their mobile-phone number,
while Bank of Kigali and Urwego is doing the same to customers in
Rwanda, where Visa struck a partnership with the government in 2011
to build out the country's electronic-payments system.
By hosting the programs through its data centers, Visa can
reduce the time it takes companies to independently roll out such
services to customers, said Ashwin Raj, head of mobile products in
emerging markets for Visa.
"We are using mobile networks and the mobile infrastructure to
be able to reach the unbanked and underbanked consumers who our
traditional clients--the banks--are unable to reach today," Mr. Raj
said in an interview.
The new platform is built on technology Visa gained through the
2011 acquisition of Fundamo, a South African company that helps
operate mobile money programs. Fundamo, which Visa acquired for
$110 million, already has 51 programs that are live on its platform
in 33 countries, according to a Visa spokeswoman. Visa will work to
move some of those programs over to its new hosted platform, Mr.
Raj said.
Visa has set its sights on generating more than half of its
revenue from international markets by 2015 as the U.S.
card-payments market matures and foreign-government interest in
providing citizens alternatives to cash and checks rises.
Currently about 44% of Visa's revenue comes from countries
outside the U.S.
"We love our position in the United States...but it's hard not
to look at what the opportunity is outside the U.S.," Charles
Scharf, Visa's new chief executive officer, said during an earnings
conference call last week in which he stressed international
expansion continues to be a top goal for the company. Visa is
aiming to displace the "astonishing" amount of cash and checks that
remain in the global market, Mr. Scharf said.
Visa credit and debit accounts were used to make $2.74 trillion
in purchases worldwide during the first half of last year,
representing more than 46% of total card purchase volume, according
to the Nilson Report, a payments-industry newsletter.
MasterCard Inc. (MA), Visa's biggest U.S. rival, is also
targeting developing countries where cash and checks reign supreme
and technology like merchant credit-card terminals and ATMs are
lacking. The Purchase, N.Y.-based company generates more than 60%
of its revenue from international markets.
With its new platform, Visa will be able to manage the
customer-enrollment process for program providers, monitor
regulatory compliance requirements and perform other functions.
"Our goal is by making the system more robust...we increase the
number of participants and the number of transactions happening in
the system, which results in" an increase in revenue that Visa
generates by processing transactions, Mr. Raj said.
Write to Andrew R. Johnson at andrew.r.johnson@dowjones.com
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