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Visa Strikes Deal with Obopay

Zacks Equity Research

Visa Inc. (V) recently entered into an agreement with disbursement and bulk payment solutions provider, Obopay Disbursements to pay out electronic funds to a prepaid card. As per the deal, Obopay will facilitate real-time payments through the corporate account against a Visa prepaid card provided to the payee.

This collaboration will aid bulk payments or transfer of large funds swiftly. Even consumers who do not have an access to traditional bank accounts can receive funds from businesses by using Visa prepaid cards. Moreover, Obopay will benefit from the deal as all consumers with a Visa debit card can have a timely access to funds wherever these cards are accepted.

Visa has increasingly invested in the emerging prepaid market with specific emphasis on the US market. The company has left no stone unturned to simplify the process of electronic payment and establishing prepaid programs across 110 countries.

This initiative by Visa is in sync with its strategy of driving growth through increased payment volumes along with consistent increase in processed transactions. The company aims to retain its strength by exploring newer growth avenues, including mobile, eCommerce and money transfer services

Expansion into emerging international markets will also support growth. The company is also generating strong cash flow and maintains a healthy capital position.

MasterCard Inc. (MA), an arch rival of Visa, is also treading the growth path through newer initiatives, including the expansion of prepaid cards, mobile banking and eCommerce. Recently, the company announced the launch of PayPass Wallet Services, the next-generation digital payment service that will facilitate quicker, secured and relaxed mode of payments for purchases.

This service can be accessed even by customers holding different card processors. The service will be functional from the third quarter of 2012.

The company currently retains a Zacks #3 Rank, which translates into a short-term Hold rating.

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