Visa Makes Play for Unbanked

November 17, 2011

Visa may have ditched its decades-old advertising slogan "it's everywhere you want to be," but not the intention. Yesterday the credit card company took the wraps off a new payment product developed specifically for unbanked and underserved consumers in developing countries. It's a prepaid account that leverages Visa's global network, as well as mobile telecomm/payments networks that operate in developing countries.

The MTN Group, a large provider of telecommunications and banking services throughout Africa and the Middle East, is up first. (Coincidentally, it's corporate motto is "everywhere you go.") The MTN Group will be integrating Visa's electronic wallet technology with its MTN Mobile Money offering, which had 5.7 million registered customers in 12 countries as of September. Customers in Nigeria and Uganda will be the first to access the new Visa-enhanced service, the two companies said.

Electronic wallets are smart chips containing credit and debit card credentials; when integrated with smart phones, e-wallets can support tap-and-go payments.

"Reaching consumers who have previously lacked access to formal financial services with secure and reliable electronic payments is finally a reality," said Visa executive Jim McCarthy in announcing the new offering. "Moble technology has become the single most important driver of financial inclusion that is enabling financial institutions, mobile network operators and Visa to connect unbanked consumers to each other and the global economy."

Today, there are more than 100 mobile money programs running in developing countries, according to GSMA, an association that represents the interests of mobile operators around the globe. GSMA puts the global remittance market at $230 billion, but estimates that under the right conditions could exceed $1 trillion within 5 years.

Visa said it aims to bolster the security, scale and inrtroperability of these programs, as well as extend payment functionality with person-to-person (P2P), international remittance and online payments. Then there's Visa's global ATM network for cash withdrawals.

"The launch of this product with Visa doesn't only enhance our current mobile offering, but also represents yet another crucial milestone in our journeyu to bring value-adding services to the growing popularity of moble phones in our markets," said Christian de Faria, MTN Chief Commercial Officer.

Visa has shown keen interest in mobile payments applications of late; in June the company purchased the South African firm Fundamo. One of the largest providers of mobile payments technologies in the world, Fundamo has a major presence in developing nations. Visa also has made strategic investments in Square, a miniature card reader that plugs into smart phones, and ISIS, a mobile money project involving leading U.S. mobile carriers Verizon, AT&T and T-Mobile.

7,000-plus microfinance institutions dot the globe today

_{- World Bank}