In 2011, global payments provider, Visa, made an announcement of its acquisition of Fundamo, a platform provider of mobile financial services in South Africa for financial institutions and mobile network operators in developing economies. The deal, totaled $110 million, that was sealed had a basic strategy — to be a route for Visa in reaching the consumer market at the low-end in Africa. During the period, Visa was functioning as a worldwide payment card provider, however, many of its customers were in middle-upper earning range. Whether through usage of a Point-of-Sale terminal, on the web service or at the bank, many people needed internet service to make transactions with their card, especially the people at the lower income range.
Nevertheless, Africa has been projected to be the next frontier of payments due to mobile money platform MPesa by Safaricom, which was initiated in 2007 and has grown to about 17 million subscribers in December 2011, in Kenya only. According to the International Telecommunication Union, the difficulty was the penetration of mobile internet which was about 4 percent. This indicated that, on the continent, millions of people were unable to use cards for transactions. The plan initiated by Visa was to solve the difficulty, using the acquired Fundamo.
Visa failed investment with Fundamo still reflects in Africa’s fintech.
This challenge happened during the time Visa’s closest rival, Mastercard, finalized its partnership of $37.4 million with the International Finance Corporation. In May 2012, the collaboration was endorsed to expand microfinance banks, while developing cost-effective delivery channels and new products, and expanding coverage in often hard-to-reach and new locations. Fundamo is currently inoperative, and some experts considered it a bad investment by Visa. A growth partner at AnD Ventures and Africa partner for Alta Global Ventures, Osaretin Victor Asemota, said that Fundamo was bought by Visa under the watch of African telco, but was discarded when Visa discovered that it did not align with their plans.
He stated that Fundamo developed his company as they assisted in the implementation of mobile money in MTN. It was permitted by MTN to build and experiment. Although, the acquisition by Visa was seen as a win before it was regarded as the opposite. He added that the failed investment hovers around the approach of Visa in competing in Africa’s fintech ecosystem, even though investments in more fintech companies has been done in recent years by the payment system operator. According to Asemota, Visa was defeated by impeding Fundamo from accepting the telco-led agent banking plan.
A MoU was signed by Mastercard with MTN Group.
Upon the acquisition of Fundamo, Visa rejected any effort toward developing the attainment of the product. Asemota said that he knew it would be a massive thing since he saw the gap with agents. It was also discovered that Fundamo powered Firstmonie of First Bank of Nigeria. In Nigeria, Firstmonie is still known as the most successful bank-sponsored agent network across Nigeria, but is still a silo, in comparison to Opay that is enabling with people building on it. A different approach has been taken by Mastercard to invest in Africa.
Also, MasterCard has bought equity stakes in Africa — in two of its largest telecom operators — that have extensive fintech businesses. Among mobile money agent providers, these two telcos are among the biggest providers. Airtel Africa and Mastercard, in 2021, appended signatures to a new commercial framework and extended commercial agreements worth about $100 million which will strengthen their collaborations in many areas and geographies which include remittance solutions, merchant acceptance, payment processing, payment gateway and card insurance. Also, a Memorandum of Understanding (MoU) was signed by Mastercard for a minority investment in the MTN Group’s fintech business, the largest mobile network operator in Africa.
Mastercard becoming a significant partner in MTN fintech business.
The valuation of MoMo increase to $5.3 billion was recognized by the investment which makes it the most respected fintech industry in Africa. MTN MoMo witnessed an increase to $1.3 million at the rate of over 18.1 percent, aside from the total population of its customers which was 60.5 million. Founder of Afridigest, Emeka Ajene, said that the fintech business of MTN is not bought by Mastercard, but it is now obvious that it is becoming a significant partner by purchasing as much as 3 percent of the business. According to a report from McKinsey & Company in 2022, it was projected that payments would increase by 7 percent.
Related Link
Wikipedia: Website
Global payments providers in Africa. – Africa has telecom operators with extensive fintech businesses. – Express your point of view.
Indeed, Africa has seen significant growth in the fintech sector, with telecom operators playing a crucial role in providing financial services. These telecom operators leverage their extensive network infrastructure and customer base to offer innovative payment solutions. This has helped drive financial inclusion and empower individuals who previously had limited access to traditional banking services. The expansion of mobile money platforms has revolutionized the way people in Africa send and receive money, pay bills, and access other financial services. These platforms have not only facilitated convenient and secure transactions but have also contributed to economic growth by promoting entrepreneurship and enabling small businesses to thrive. The collaboration between telecom operators and fintech companies has paved the way for the development of innovative payment solutions, such as mobile wallets and digital payment platforms. These advancements have made financial transactions more accessible, efficient, and cost-effective. As a result, individuals and businesses across Africa can now benefit from the convenience and flexibility offered by these digital payment solutions. The growth of global payments providers in Africa is a testament to the continent’s potential and the increasing demand for modern and inclusive financial services. It is an exciting time for the fintech industry in Africa, and I believe that these developments will continue to drive economic growth, financial inclusion, and improve the overall quality of life for people across the continent.
These platform will help to make transactions more convenient and secure, while also helped to economic growth by encouraging entrepreneurship and allowing business to prosper in the country. between telecom carriers and fintech firms has cleared the path for the creation of cutting-edge payment solutions such as mobile wallets and digital payment platforms.
African global payment providers. – Africa has telecom companies with strong fintech operations. The expansion of global payment providers in Africa demonstrates the continent’s potential as well as the growing need for modern and inclusive financial services. These telecom carriers offer novel payment options by using their enormous network infrastructure and consumer base.
The African platform will help to make transactions more convenient and secure, and encourage entrepreneurship and allowing business to prosper in the country. the creation of cutting-edge payment solutions such as mobile wallets and digital payment platforms.As a result, individuals and businesses across Africa can now prosper from the convenience and flexibility offered by these digital payment solutions