Last week, MasterCard Inc. (MA) and Telefónica S.A. (TEF) announced its joint venture (:JV) under the corporate name – Wanda with tagline “Your Mobile Money”. This reflects one more step taken by the company toward boosting its mobile commerce (mCommerce) vigorously.
MasterCard had formed a JV with Brazil-based telecom operator Telefónica in November last year with the objective to penetrate emerging markets. The JV will be owned by both the parties equally.
Accordingly, Wanda has been built through the JV to explore mobile financial services in the 12 markets of Latin America. Telefónica already operates through its Movistar brand in these markets. Thus, Wanda will operate in these markets to offer mobile payment solutions to over 87 million Movistar customers. Besides, Mobile Payment Solutions (:MPS), with whom Wanda has a global agreement covering the 12 Latin American markets, will aid the development and implementation of the mobile wallet technology and its services.
Additionally, Wanda will be connected to mobile wallet and prepaid accounts that will be accessible globally across mobile networks. Of late, mobile banking has come up with a profound scope of providing the consumers with a convenient, user-friendly, value-for money, transparent and secure mode of making transactions, which include person-to-person payments, bill payments, adding cell phone minutes and other banking services.
Moreover, while a sophisticated banking platform is yet to be established in most of the economies of Latin America, Africa, Middle East and Asia, mobile phones have penetrated even the remotest zones of these emerging markets.
Overall, we believe that these efforts apart from showering ample organic growth opportunities will also become a part of MasterCard’s long-term growth. Furthermore, this will also enhance the company’s operating and competitive leverage in the upcoming quarters. Such business diversification is also expected to augment MasterCard’s core processing capabilities in an increasingly complex payments environment, thereby reflecting its endeavours to adapt itself to the emerging industry trends.
Besides, other card giants such as Visa Inc. (V) and American Express Co. (AXP) are also seeking greener pastures through newer initiatives, including the expansion into prepaid cards, mobile banking and eCommerce, given the regulatory clouds hovering over the credit and debit card businesses.
MasterCard carries a Zacks Rank #3, implying a short-term Hold rating along with a Neutral stance over the long term.
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