Visa, the global payment processor, is deepening capabilities in Africa. It has pursued many strategies in the past, with varying levels of success, but the introduction of mVisa seems to be changing the game.
Simply, mVisa is offering what any decent fintech in Africa will promise to offer the banks. But Visa wants to do it by itself, making it harder for the fintechs to find an opening to “plug” into the banks as they currently do. As I have written that it is an illusion for any fintech to imagine the disruption of Nigerian banks, in the short-term, this new product makes that perspective even more on the money. There is no bank in Africa which will not like to connect into this mVisa ecosystem, simply because most are already Visa partners.
For the fintech to take down and disrupt Nigerian banks, they must change the basis of competition. At the moment, they are sustaining innovators which are fortunate the incumbents are not doing what they are doing.
That is the problem for fintechs: they have the most important global fintech ahead of them in the partnerships with local banks
What is mVisa?
mVisa is a way to pay and be paid with phone. No need to fumble for change or hand-over your card to the merchant or queue up at your bank/ATM to deposit and withdraw cash. It is simply Scan, Pay & Go. That simplicity is huge, because with this, the acquisition cost of Post of Sale (PoS) terminal is gone.
With mVisa, consumers can directly access all of the funds in their bank accounts to pay merchants (person-to-merchant or P2M) or individuals (person-to-person or P2P). Because the transaction runs through the Visa network, the consumers and merchants do not need to be customers of the same bank or mobile operator. …Consumers can also use mVisa agents for domestic remittances as well as to access their cash if there is no ATM machine nearby. These features are intended to accelerate financial inclusion
According to a report by the Guardian, mVisa has been launched, in Nigeria, and Diamond Bank, Fidelity and First Bank attended the launch, and already on-boarded.
The solution will allow consumers in any part of Nigeria make payments, digitally, regardless of whether they use a smartphone or feature phone, said, Andrew Torre, president for Visa Sub-Saharan Africa at the launch in Lagos on Wednesday. Torre said, “Small and medium merchants in particular, no longer have to invest in expensive point of sale infrastructure as mVisa gives them the freedom to accept payments in a convenient, secure and affordable manner that their customers trust.
Why this is Huge
This is mobile money without mobile license. If every bank connects to it and customers can effectively pay without regard to where the bank account is domiciled, you suddenly have a new huge infrastructure that goes through Visa network. It is not clear what a fintech will offer considering that Visa will get scale as banks will like to join the network to serve their customers especially when they are traveling abroad. The fact that it can work on feature phone is a huge innovation.
Any African startup must have to deal with three issues:
- Provide a clear alternative, at scale, larger than Visa, locally and internationally. We know that this will not be easy considering the scale of Visa.
- Find other ways to engage the banks on mobile since the fintechs continue to plug into banks. The banks will like to ascertain that a proposal is huge to buy into it.
- Remember, that mVisa can be integrated into the banks’ apps which means the banks are offering this from their own apps. A startup must demonstrate why a bank will make its own solution muted for a similar solution from a fintech.
Watch out for more banks across the continent joining. Visa has made life easy for them as they can easily integrate this and get to market fast. Visa handles many technical things for them while they focus on getting customers. For the very simple fact that mVisa is agnostic of the bank the customer account is located, and also supports feature phones, it is a huge challenge for local fintechs across Africa to overcome. The startups must have to change their games because partnerships with banks will be harder, as they are going mobile through mVisa, and may not see a reason to anchor a startup for for a product which is already in their apps.