(NYSE:V) recently announced that it has agreed to acquire Fundamo,
which is a leading provider of mobile services for financial
institutions and mobile network providers in developing countries.
According to Visa, the acquisition will help it provide the next
generation of of mobile payments options. Visa also announced a
long-term commercial agreement with UK's Monitise Plc.,
a leading provider of mobile financial services for
institutions in developed countries. Visa is the largest
provider of payment card network in the world and competes
with MasterCard (NYSE:MA),
), Discover (
) and Capital One (
We have a price estimate of
$86 on Visa's stock
, which is about 15% above the current market price.
Fundamo at a Glance
Fundamo's mobile financial services platform enables the
delivery of mobile financial services to unbanked and under-banked
consumers around the world, including person-to-person payment,
airtime top-up, bill payment and branchless banking services.
Visa can leverage Fundamo's platform to offer enhanced
functionality and new services to existing mobile financial
services subscribers across Africa, Asia and Latin America and has
the potential to rapidly expand its subscriber base as well as
increase the number of transactions. According to
Visa, Fundamo's deployments currently have a user base of more
than five million registered subscribers and the potential to reach
more than 180 million consumers with mobile financial services. The
acquisition will cost Visa approximately $110 million in cash.
Monitise has expertise in customizing mobile applications for a
broad range of phone models and operating systems which will help
Visa to expand its presence in the mobile financial services. Visa
and Monitise also plan to introduce new mobile services for
existing Visa account holders outside the US that will enable
electronic payments including mobile top-up, utility bills payments
and transit ticketing.
The mobile payment market is growing rapidly and Visa is
expected to play a dominant role because of its recent strategic
acquisitions that will enhance its core payment processing
The acquisition of Fundamo along with CyberSource and PlaySpan
will help Visa to boost its number of processed transactions from
just under 48 billion in 2010 to about 90 billion by the end of our
forecast period. Transaction fees account for nearly 30% of our
price estimate while cross border fees account for just under
In the chart above you can drag the trend line to see how this
forecast impact's Visa's price estimate.
See our full analysis of Visa