Wednesday, 25 April 2012

Visa executive states Mobile won't kill card payments in emerging markets

According to Elizabeth Buse, Visa’s group president for Asia Pacific, Central Europe, Middle East and Africa, Visa Inc. still sees a future in payment with plastic, even in the emerging markets where it is aggressively seeking to reach unbanked consumers through new mobile payment platforms.

Despite the anticipated ubiquity of a range of mobile payment systems in emerging markets, such as Indonesia and India, the growth of the middle class in these countries means credit cards will still be sought by consumers.

"In those markets, you will have people who want feature-rich credit products, typically with a card--those are the people that travel a lot, who do traditional shopping online and who tend to be at the top of the pyramid," stated Buse in an interview with Dow Jones Newswires.
“Then you will have the people from the rural areas, who today are excluded from financial services, who will likely have mobile as their only way and then you'll have some hybrid in between. You already see some of that in India today."

Visa Inc. which publicly listed in the U.S. in March 2008, is holding its first board meeting outside the U.S. in Singapore on the 25th April and 26th April.

Singapore is Visa's largest location outside the U.S., employing more than 900 of the company's 8,000-strong global staff base. It is also close to the rapidly growing emerging markets Visa is keen to penetrate such as Indonesia.

"There's a ton of cash here (Asia)--the way that we go after it would be different to the way we'd go after it in the U.S. or even Australia and that's where innovation comes in," Buse said.

"And it's critically important over here because a lot of that cash is spent by people who don't have access to traditional banking system so they're unbanked to underbanked."

Visa is close to achieving its goal of deriving 50% of its revenue from outside its home U.S. market by 2015 ahead of schedule; in the fourth quarter of last year, non-U.S. markets accounted for 46% of revenue.

The group last year also acquired Fundamo--a South African
mobile payments facility which operates in 40 countries, mostly in Africa--for US$110 million, a company it plans to use to deploy mobile payment systems throughout emerging markets.

Fundamo has partnered with a microfinance wholesale bank, Bank Andara, in Indonesia and is in the process of rolling out a mobile payment system in the country using pre-paid Visa accounts.

Buse says this programme is targeted at customers outside the major branch networks of Indonesia's banking system, predominantly people in the "bottom half" of the wealth pyramid.

"Mobile, we believe, will be the way that electronic payments are brought to the majority of these populations," she said.

"The rate of adoption though remains to be seen but we do think there will be a leapfrog in a number of these markets where the traditional infrastructure won't be there."
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