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Fundamo sale to Visa: vote of confidence in Africa

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South Africa’s best-unkept secret in hi-tech payment systems is out, thanks to a $110m acquisition by Visa, writes ARTHUR GOLDSTUCK

Yesterday’s announcement by Visa that it is acquiring South African payments technology company Fundamo for $110-million is a massive vote of confidence in hi-tech from the developing world.

It also once again highlights the positioning of Cape Town as the Silicon Cape hub of innovation and hi-tech entrepreneurship in Africa.

Fundamo has been leading mobile payments technology in the developing world for a decade now, making slow but steady inroads into banking systems, mobile solutions and ‚ almost invisibly ‚ consumer solutions. Fundamo has been deployed in more than 40 countries, mainly in Africa, Asia and the Middle East, and is in use in more than 50 mobile financial services. Despite this, it is almost unknown outside technology media.

The announcement, made in Cape Town yesterday, describes Fundamo as ‚a leading platform provider of mobile financial services for mobile network operators and financial institutions in developing economies‚ .

The deal was announced along with a new, long-term commercial agreement with Monitise, ‚a leading provider of mobile money solutions for financial institutions in more developed geographies‚ .

This positions Fundamo firmly as the ‚other half‚ of the payments equation that must link the developed world financial system with that of the developing world, where platforms for mobile payment processing are likely to be dominant in the future.

‚The investments will accelerate the execution of Visa’s global strategy announced last month to provide the next generation of payments solutions, enabling consumers to transact wherever and whenever they choose, using a card, a computer or a mobile device with Visa’s reliability, security and global acceptance,‚ Visa said in its announcement.

‚The combination of acquiring Fundamo and expanding the relationship with Monitise will enable Visa to deliver best-in-class mobile financial services and payments capabilities to consumers across the full spectrum of uses, geographies and mobile environments from basic services on simple handsets to more advanced services for smart phone owners.‚

It is clear that the success of the M-Pesa mobile payments service in Kenya has been a catalyst for intensified interest in mobile payment systems throughout the developing world. There is barely a country in Africa where local and international organisations are not experimenting with or implementing mobile payment systems.

M-Pesa was in effect a starter’s pistol for a mobile money race in the developing world. Its success in East Africa has not only awoken local players to the market potential, but also alerted multinationals to the fact that they are missing out on the next big opportunity in global payment processing.

Visa itself was showing off mobile payment solutions as long ago as the middle of the last decade. However, when Gadget was given a demonstration at the Consumer Electronics Show five years ago, it was clear that Visa were behind South African mobile payment technology even then.

Over the past three years, as mobile payment solutions have proliferated across Africa, it may well have resembled a science fiction horror movie for the global payment giants like Visa and MasterCard. The market was being reinvented even as they watched, and it was coming from a distant world that they always viewed only as a potential market rather than a potential competitor.

Visa puts the Fundamo advantage quite succinctly:

‚While mobile financial services in developing markets are growing and have become a core service offered by many mobile operators and financial institutions, these services are often limited in scalability and reach and are not interoperable with other regional payment services or global payments networks.

‚Fundamo’s platform enables the delivery of mobile financial services to unbanked and under-banked consumers around the world‚Äîincluding person-to-person payment, airtime top-up, bill payment and branchless banking services.‚

The combined Visa Fundamo platform will ‚add enhanced functionality and new services to existing mobile financial services subscribers across Africa, Asia and Latin America for safe, reliable and globally accepted payments solutions. It will expand the utility of closed-loop systems, enable them to be interoperable, make financial services available to more consumers and offer merchants access to new customers.‚

The impact of the deal could be felt not by the millions using credit card payment solutions right now, but by billions of unbanked and under-banked consumers.

Joseph W. Saunders, chairman and chief executive officer of Visa, underlined the true power of bringing Fundamo into the Visa offering: ‚Combining Visa’s unparalleled network scale, global reach, extensive product suite and established financial institution relationships with Fundamo’s expertise in delivering mobile financial services in developing economies presents us with an important long-term opportunity to grow our business and drive financial inclusion in key geographic markets.‚

For much of the past decade, Hannes van Rensburg, CEO of Fundamo, has been presenting the Fundamom value proposition at conferences and to local business media, but few have paid attention ‚ until now.

Van Rensburg and the Fundamo management team will continue to manage Fundamo implementations, but working with Visa’s mobile product teams.

‚Mobile network operators and financial institutions will now be able to take advantage of Fundamo’s trusted mobile financial services platform backed by Visa’s high standards for security, reliability and scale,‚ he says.

* To view a video on Visa’s Global Strategy for Next Generation Payments Solutions on YouTube, click here (http://www.youtube.com/watch?v=3N95gEG3opM&feature=channel_video_title)

* Follow Arthur on Twitter on art2gee

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