Heading Mobile Money Off at the Pass
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9 June 2011
Visa announced the acquisition of Fundamo, a top solution provider for Mobile Network Operators (MNO) to support mobile payments. Visa clearly saw mobile money as a threat. Too many mPesa success stories combined with the ability to send money from mobile phone to mobile phone across carriers would create a powerful global payment scheme in developing markets. Mobile payment hubs such as that proposed by BICS or Sybase 365 for MNO payment interoperability would enable people to send money from one mobile number to another in the same way they send an SMS. This is a huge threat to Visa an no one would understand that better than Bill Gadja, now at Visa and formerly at the GSMA as chief commercial officer. Visa's acquisition of Fundamo gives Visa an entree into the MNOs. Visa talked about offering a "Visa overlay" mapping each mobile money account on the Fundamo platform to a Visa prepaid account, enabling people with a mobile money account to use it as a Visa card outside the mobile network operator's closed loop system: e.g. on a web site that accepts Visa. It's a great way to get a toehold in emerging markets and compete with a mobile payment scheme that is beginning to take hold across carriers. This is a good strategy for Visa to try and head mobile money off at that pass. There was no one better to buy than Fundamo.
I think we're in violent agreement. :)
Bart Narter's comments are pertinent. Having written a few articles on mobile payments and presented on mobile money in Africa at a recent seminar in Nairobi (home of M-PESA), I can see that credit card companies and other traditional payments providers risk being outflanked by mobile network operators. Visa's purchase of Fundamo is therefore a good defensive measure.