Visa believes that by 2020 more than half of all payments made in Europe will be done through mobile devices, so it is continuing to put more investment into how it will remain a central part of those transactions. In the latest development, mobile money specialist Monitise has announced an extended deal in which Visa Europe will license all of Monitise’s technology in an agreement it says will bring in a minimum of €45 million ($59 million) in the next three years, “with greater revenues as certain user generated thresholds are achieved,” a spokesperson says. Visa, a minority shareholder in the mobile company, is also taking a further investment in Monitise of about £15.6 million ($23.5 million), plus options for more investment.
The two have been working together since February 2011 (including this licensing deal from June 2011, when Visa bought Fundamo for emerging market mobile payments solutions) to provide payments solutions and mobile banking technology to financial institutions in the region, a relationship that covers 3,000 banks in 36 countries. There are 466 million Visa accounts in Europe and the company says that with one in every 6.75 euros of spend in the region passes through Visa services.
The investment, meanwhile, follows on from an investment made by Visa Europe in Monitise in August 2012 of about £2.1 milllion. In total Visa currently owns about 7.5% of Monitise. Of this current investment, Monitise writes that when the agreement being announced today is finalized, Monitise will grant Visa Europe a warrant to purchase 43 million ordinary shares of 1 pence each in the Company at a price of 36.25p per Ordinary Share, representing the closing mid-market price of 4 March 2013. “In addition, the Company will grant Visa Europe a further warrant to purchase an additional 6 million Ordinary Shares at a price of 1 pence per Ordinary Share, being the nominal value,” it notes in the statement.
Monitise works both with Visa Inc. in the U.S. as well as Visa Europe, which are separate but coordinated entities. (Part of Monitise’s work with Visa in the U.S. comes in the form of business it picked up by way of buying Clairmail in the U.S. for $173 million a year ago). Monitise says that about $31 billion passes through its services annually.
The deal will specifically cover three products developed by Monitise: Bank Anywhere, Pay Anyone and Buy Anything, which span the range of main services that consumers use mobile devices for today: apps to manage money in their accounts; services to pay others; and services to buy things. The continuing relationship, coupled with Visa’s wider activities to push mobile payments and mobile banking, are a sign of how seriously it is taking the space at the moment.
“Mobile is changing the way we pay and buy. Visa continues to ensure that financial institutions remain at the centre of this important landscape,” said Steve Chambers, Chief Information Officer at Visa Europe, in a statement. “We are delighted to be deepening our long-standing relationship with Monitise to ensure continued best-in-class services for Visa Europe members.”
Monitise chief commercial officer Lee Cameron doesn’t spell out how it will work with other payment providers, which points to how the space will continue to have a degree of fragmentation for some time to come, despite his statement implying otherwise: “Payments is about partnerships and Visa is the industry benchmark for trusted payments innovation globally. This agreement underpins our growth expectations and we are honoured to be playing our role as a technology enabler and ecosystem partner in helping Visa Europe deliver new solutions that ensure its members can offer the most compelling, intuitive and robust Mobile Money services.”