Visa partners with Kenya-based M-Pesa to launch virtual cards
- Visa and Safaricom are launching a virtual card to enable M-Pesa users to transact on Visa’s network.
- Digital payments are rapidly replacing cash in Africa, making the region an attractive destination for digital payment giants like Visa.
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The news: Visa has partnered with Kenya-based mobile money platform M-Pesa (owned by telecommunications giant Safaricom) to launch the M-Pesa GlobalPay Virtual Visa Card, per TechCrunch. The virtual card will allow users to make payments on Visa’s global network with the M-Pesa app or USSD mobile payment method.
What is M-Pesa? M-Pesa is a mobile money platform that offers
services through a user’s SIM card. M-Pesa is similar to peer-to-peer payment platforms in that it also allows users to send, receive and hold money in their accounts. However, M-Pesa transactions are sent via SMS messages and no bank account is required to use the service.
Since its launch in 2007, M-Pesa has amassed 51 million users, 30 million of them in Kenya alone. The system was quite successful for Safaricom and became the largest source of telecommunications revenue. M-Pesa revenue grew nearly 40% annually, reaching $927 million in the year ending March 2022, according to TechCrunch.
Why it’s worth watching: Digital payments are rapidly replacing cash in Africa, making the region an attractive destination for digital payment giants like Visa.
The use of cash in the Middle East and Africa has decreased by 16.3% per year in 2021 and is expected to decrease by almost 30% between 2021 and 2025, according FIS. This trend may explain why global payment players are increasing their presence in the region:
In April, Visa open an innovation hub, intended to contribute to the development of digital payment and commerce tools adapted to the region.
And just last week Mastercard sign deals with payments fintech Sokin and processor-transmitter i2c to expand its presence in the Middle East and Africa.
The Opportunity: Here’s how the combination can help fuel the growth of Visa and M-Pesa:
Visa can use M-Pesa to deepen its ties in Africa. M-Pesa is one of the most popular mobile money providers in Africa, which accounts for 70% of the $1 trillion global mobile money market, according to GSMA data. cited by Quartz. Working with M-Pesa enables Visa to capitalize on Africa’s growing digitalization by raking in the volume of the mobile money system.
M-Pesa can expand its acceptance network with Visa. The partnership will enable M-Pesa users to make digital payments on Visa’s network of more than 100 million merchants. Previously, M-Pesa users were confined to transactions within the system’s network of 400,000 traders. M-Pesa’s tie-up with Visa can increase the usefulness of the system by providing users with a wider shopping network, which also helps increase the revenue potential of the system.
Since the card technology infrastructure is still development across Africa, Visa and M-Pesa must continue their development efforts for their virtual card solution to see long-term growth.
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