Visa Inc. V has partnered with MFS Africa, the pan-African fintech leader, to close the gap between the rapidly growing mobile money ecosystem in Africa and the world of online digital payments.
The agreement will significantly expand Visa’s reach and its ability to facilitate commerce in the region.
Despite the presence of mobile money wallets, international online payment services are impossible in the region due to absence of a virtual or physical network credential associated with the same.
To address this shortcoming, MFS Africa will distribute Visa payment credentials across multiple markets in Africa. This will allow mobile money users connected to the MFS Africa platform to generate an instant Visa virtual card with a 16-digit number. This card will be linked to their mobile money accounts and can be used for remittances and ecommerce transactions.
MFS Africa is the region’s largest digital payments hub, connecting through one API more than 180 million mobile wallets on the continent.
MFS Africa will also utilize Visa’s real-time push payments solution Visa Direct, a real-time push payment service that has processed 2 billion transactions in the past year. This will provide mobile money users on the MFS Africa platform with a fast, convenient and secure process to send and receive money and remittances directly from/into their mobile money wallets via eligible card credentials.
The expansion of Visa’s services in the region will likely be accretive to its business. This is because the remittances to Sub-Saharan Africa are set to increase by more than 5.6% between 2019 and 2020, reaching $51 billion, per the World Bank. However, the region is still the most expensive in the world to send money to with average cost of 9.3%. Visa’s services are expected to reduce this cost.
With frequent use of mobile-led, digital payments ecosystem in Africa, Visa’s services are expected to be accepted on a large scale.
Year to date, the stock has gained 38% compared with the industry’s growth of 41%.
Visa remains the frontrunner in the payments industry when it comes to innovation and technology, business growth, tie-ups and partnerships for brisk business. These have driven business volumes for the company, which has payments volumes higher than that of Mastercard Incorporated MA, American Express Co. AXP and Discover Financial Services DFS. These are some players in the same space.
Visa carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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