Monitise, the global mobile money software provider based in the UK, has entered into a provisional three-year agreement with Visa Europe to allow the card scheme to license its technology and buy a stake in the firm. The agreement could be worth a minimum of EUR45m in revenues over the length of the contract, but more importantly its sees Visa increasing its stake in the firm.
As part of the agreement, which gives the card scheme access to all of Monitise’s mobile money technology, Visa Europe will be allowed to buy 43m ordinary shares of 1 pence each in Monitise at a price of 36.25p per share, representing the closing mid-market price of 4 March 2013, plus a further warrant for an additional six million shares.
Visa Europe already owns 7.5% of Monitise stock under a previous agreement from last year and has invested in the Mobile Money Network and other schemes as it seeks to carve out a centralise role for itself in the developing mobile financial services arena. Visa Inc in America is also a user of Monitise technology and the firm strengthened its hand in the US with its $173m purchase of Clairmail last year.
The extra investment is needed, however, as Monitise continues to lose money with a £14.7m loss reported last month despite a 63% rise in revenue. The acquisition moist likely contributed to this but it is also the case that investing in developing technologies and fields is expensive and backing is likely to continue to be needed to ensure widespread adoption, a large market share, and eventually profits.
For Visa Europe the rationale is clear with the business predicting that by the end of this decade more than half of its transactions, across 466m Visa account holders in Europe, will be carried out on a mobile handset.
Commenting on the link-up Monitise’s chief commercial officer, Lee Cameron, said: "Payments is about partnerships and Visa is the industry benchmark for trusted payments innovation globally. This agreement underpins our growth expectations."
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