Visa Introduces Mobile Payments for Emerging Markets

Visa has introduced a payments product designed for emerging markets to serve the needs of "unbanked and under-banked consumers" who have mobile phones.

The trend in emerging markets is that mobile phone penetration will be higher than bank penetration, Brad Jones, director for mobile money at Visa, said Thursday. Consumers are far more likely to have a mobile phone than a bank account, he added.

The prepaid Visa account can be accessed through a mobile phone and can be used by account holders to send funds to each other, send and receive international remittances, make purchases at merchants or online where Visa is accepted, or withdraw funds at a Visa ATM (automated teller machine), Visa said in a statement.

Users of the payments product will not require Internet connections on their mobile phones, and will be able to use the cheaper phones in the market, Jones said.

The common access channel for the product is USSD (Unstructured Supplementary Service Data) which can be accessed on low-cost handsets, Jones said. USSD is a protocol used by GSM (Global System for Mobile Communications) phones to communicate with the operator's computers.

The technology for the service comes from the company's acquisition earlier this year of Fundamo, a South African vendor of a mobile financial services platform for financial institutions and mobile operators.

Users at ATMs or aiming to make transactions online will have to enter combinations of the mobile number linked to their account, an identification number, and a CVV (card verification value) code issued to them, Jones said.

Visa plans to work with existing mobile money programs to extend their functionality and interoperability with other systems. It said that developing countries in Africa, Asia and Latin America are among the first target markets for the new product.

A tie-up with Visa will help customers who are using closed-loop mobile money systems to connect outside the loop to ATMs and points-of-sale, international businesses, and online transactions, Jones said. "It is really increasing the transactions that those consumers have available to them today," he added.

MTN Group, a telecommunications provider in Africa and the Middle East, plans to offer the new Visa product to MTN MobileMoney customers across its markets. As part of the Thursday launch, the new product will be available to customers in Nigeria and Uganda.

MTN MobileMoney is an electronic wallet service that enables users to send and receive money from other mobile users, as well as withdraw cash and send money to people who do not have mobile phones through MTN-designated agents. Customers can deposit money into their prepaid accounts at MTN service centers or through MTN agents, according to information MTN's Uganda website.

Mobile payment services are a large opportunity both for banks trying to extend their reach, and mobile operators trying to boost revenue, according to analysts.

A number of banks in India for example have tied with mobile operators to take mobile payment services to India's poor who do not have access to banks, but have mobile phone connections. The payment services have got a boost after the country's central bank, Reserve Bank of India, allowed banks to appoint "banking correspondents" in remote areas to open new accounts, dispense and accept cash from customers, and offer other services on behalf of the bank.

In June, Nokia started shipping mobile phones in India that were preloaded with its banking application, based on the Obopay mobile payment platform. It is offering services with two banks in India, and is offering some of its retail outlets as correspondents to banks, a spokeswoman said. The deal with one bank has brought the company 500,000 users so far.

John Ribeiro covers outsourcing and general technology breaking news from India for The IDG News Service. Follow John on Twitter at @Johnribeiro. John's e-mail address is john_ribeiro@idg.com

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