Visa Inc. said its acquisition of the South African mobile payments company Fundamo will help it serve more underbanked consumers abroad.
The San Francisco payments network said it would pay about $110 million for the Cape Town company. The deal was announced Thursday and was set to close the same day.
Visa also said it signed a new agreement with the U.K. vendor Monitise PLC to further develop services for person-to-person payments, transaction alerts and marketing offers.
Visa executives have said their company's sheer size would expand mobile payments services, which require wide adoption by banks, consumers and merchants.
The Fundamo acquisition is an effort to broaden the scale of mobile payments services, Visa said. "There has been a lot of pioneering, and the [payments] industry is starting to get worried about the scalability, the reliability, of these companies as they become big in payments," said Bill Gajda, Visa's head of global mobile products. "We think Visa coming in, in the way that we have, is going to be a signal of confidence that this is real."
The technology company works with retail banks and mobile network operators to allow users to deposit cash into a mobile wallet, withdraw that cash and manage accounts through basic cellphones.
Gajda said Visa had been speaking to Fundamo for about three months. Visa plans to integrate the Fundamo platform into its payment network by early 2012.
Visa, which faces competition from other payment networks as well as new entrants like Google Inc. and Isis, a joint venture of AT&T, T-Mobile USA and Verizon Wireless, is trying to enhance its mobile payments capabilities. In May it announced plans to offer a digital wallet service this fall with several card issuers.
Adil Moussa, a senior analyst with Aite Group, said, "We are going to start seeing, on the international front at least, a bigger utilization of the mobile platform and an overlay of the Visa account structure in order to allow those transactions to happen." He said "nobody really had any solid plan yet so everybody has been waiting to see what everybody else is doing."
Gajda said Fundamo is in talks with several U.S. retail banks to bring its technology to the U.S. But "there is no road map."
Visa, which owns 14% of Monitise, said the new agreement will also focus on the development of mobile services in the U.S. and other countries. For domestic clients, Visa plans to work with Monitise to release a new mobile banking service for users of Visa's debit and prepaid processing platform.