Aletha Ling, Fundamo: Visa already plays a unifying role in the
financial services industry, and it has the
Bill Gajda, Visa: We are going to use Fundamos platform
bring hundreds of millions of new Visa accounts to the
A series of deals between operators, financial institutions and
mobile money specialists has given new confidence that mobile
banking is about to become big business for the mobile
Of course mobile banking is already big in emerging markets
as the GSM Associations Gavin Krugel says in his
interview on pages 32-33. But now it is making the breakthrough
to the mobile industry in the developed world, spurred on by
the development of smartphones and the related spread of mobile
Juniper Research reported in June that there are already 1.8
billion mobile phone users making payments for digital goods,
and this number will rise to 2.5 billion by 2015: tickets for
transport and entertainment are driving the growth, said the
market research company.
Senior analyst David Snow gave more details: While the
mobile payments sector offers substantial growth opportunities,
it needs to be seen by innovative players as a platform from
which to develop new value added applications and services such
as personalised mobile coupons, loyalty schemes, and novel
augmented reality offerings.
However, the Juniper report also warned that fraud levels with
certain types of payments are on the increase making
mobile security a key issue in the near future.
A report by opinion pollster YouGov in association with
research company Antenna found that 13% of US mobile internet
users are using banking apps, and so are 15% of UK users.
Antennas research also found that most users are wary
about using banking apps that do not come from their own banks:
1% of US respondents and less than 1% of UK respondents said
the preferred a banking app not provided by their own bank, and
69% of UK users said they have security concerns about mobile
banking services and would stop using the service if they felt
their data was not secure.
Overall, 40% of US mobile internet users and 25% of UK users
have used mobile banking. Almost as many 36% in the US
and 21% in the UK have used mobile banking to find local
branches or ATMs.
Jim Hemmer, CEO of Antenna, says: Mobile banking has now
taken hold. The public clearly want to fit their banking chores
around their lives and not their lives around their banking
chores, and using their mobiles, they can.
He adds: Banks need to start offering full mobile banking
services which allow their customers to make deposits, balance
transfers and the like as soon as possible, because its
those banks which build up mobile trust in the short-term who
are going to gain the most when m-commerce becomes
And a series of agreements involving major companies has shown
that m-commerce is on the brink of becoming
Credit card giant Visa is the centre of two of them. In early
June the company renewed its agreement with Monitise, a
specialist in mobile money. A new five-year alliance between
the two represents minimum annualised revenues to Monitise in
excess of $10 million in the first three years, with potential
for greater revenues in years four and five as key milestones
The agreement is intended to enable Visa to mobilise existing
Visa account holders in the US and in other parts of the world
to use their phones to replicate traditional card payments.
Mobile money is an industry that will have a big societal
impact as the 5+ billion mobile phone users around the world
discover new ways to bank, pay, trade and shop, says
Alastair Lukies, the CEO of Monitise. This agreement
validates Monitises strategy of becoming the leading
trusted enabler in the space and cements our role in this ever
Only one day later Visa made a further move in the industry by
buying another mobile money company, Fundamo, for $110 million.
Fundamo, based in South Africa, has provided the systems for
more than 50 deployments of mobile payment projects in over 40
countries, mainly in emerging markets.
Bill Gajda, Visas global head of mobile, says: We
are going to use Fundamos platform to bring hundreds of
millions of new Visa accounts to the unbanked. Fundamo has a
long track record and a senior management team that has decades
The deal was negotiated in less than three months, says Gajda,
formerly COO of the GSM Association.
Fundamo, which has provided the technology for operators in
Africa, Latin America, the Middle East, Pakistan and India, was
actively looking for a new owner, says Aletha Ling, the
companys COO. We selectively contacted a number of
partners. Wed come to the conclusion that seeing
the industry entering this phase in its lifecycle we
felt sure that though we had the industrys leading
platform the industry needed a step change and we set our minds
to what that might be.
She points out: Visa already plays a unifying role in the
financial services industry, and it has the connectivity.
A deal with Visa enables Fundamo to close the loop of
existing mobile payments operators.
Fundamo worked with mobile operators and banks, but that was
not enough to give the company scale, she adds. You need
somebody that bridges both.
She would not say which other organisations Fundamo was talking
to before it began exclusive discussions with Visa.
Back at Visa, Gajda says the card company has been
leading the way with contactless payments for four or five
years. The deal with Monitise which is not a
takeover will allow it to help banks extend their mobile
What was attractive about Fundamo is the emerging markets
strategy, he says. We can extend services and Visa
accounts to the banked and the unbanked. That includes
what he calls under-banked segments in countries such as the
US, he adds.
There are billions of people who have a pay-as-you-go mobile
phone but no bank account. Many of them, thanks to systems from
companies such as Fundamo, have started to rely on mobile
payments. But payment services today are only in closed
loop platforms, says Gajda. The company wants to
reproduce in the world of mobile payments what it has done over
the past decades with the conventional Visa card.
The idea is to enable mobile banking, within the same operator
or between different operators, whether the individuals have
bank accounts or not. I dont think the operators
become banks. But the mobile operators become issuers
they will issue a Visa account. Fundamo will provide the
technology to do that. There will always be a bank in the
background, he notes.
For Fundamo the deal gives a new opportunity for growth after
10 years of development in emerging markets. Weve
been seeing maturity in these markets, says Ling.
Visa plans a significant investment in the company,
says Gajda, to expand Fundamos reach in existing areas
and to develop new areas, including Latin America and
The takeover may see a change from Fundamos traditional
way of doing business. Until now it has licensed its platform
to banks, but Visa is examining the idea of running a fully
managed service that would be provided to operators and banks
so they can focus on their core business.
And, in the hands of Visa, Fundamo will be able to create
a product overlay over the existing closed loop, to allow basis
e-commerce and m-commerce transaction. Services include
Western Union money movements, payments to government agencies
and private payments.
Why the two almost simultaneous deals, with Monitise and
Fundamo. The Monitise deal does not create new Visa accounts,
says Gajda. It is focused on high-ground mobile banking
Integrated with banks
Android and iPhone apps are integrated with banks
own back offices. On the other hand, Fundamo creates for
Visa a whole range of brand new accounts. The
Fundamo deal is very strategic for Visa, he says.
Meanwhile in the UK four of Europes biggest operators
came together in a bid to regain the initiative in mobile
commerce, by creating their own joint venture.
This mobile marketing and payments joint venture is backed by
Vodafone, Telefónica and Everything Everywhere, itself a
joint venture of France Telecom and Deutsche Telekom: three of
Europes biggest integrated operators and the biggest
mobile operator in one powerful group.
Theres been a proliferation of standards,
said Tom Alexander, announcing the move as one of his last
public roles as CEO of Everything Everywhere. This is an
opportunity to create a commercial joint venture for mobile
commerce, for mobile payments and for mobile advertising.
Ronan Dunne, CEO of Telefónica UK, sees the JV as
an accelerator, which will be built on existing
standards. The is no danger of having to change
Its a UK-only venture, but Guy Laurence, CEO of Vodafone
UK, admitted that there is potential for this as a
model. The UK has the highest adoption of
smartphones in Europe, so the need is more
pressing there, he added.
The advantage for partners banks and others is
that there will be a single point of contact when wanting to
deal with the mobile industry.
Of course, thats just what the others, such as Visa and
Monitise, are hoping too. GTB