Visa buys South Africa’s Fundamo for $110m

Ray Maota

Visa has bought Fundamo, a South
African-based company specialising
in mobile phone-based financial services,
for US$110-million.
(Image: Ray Maota)

CEO and founder of Fundamo, Hannes van
Rensburg, was named one of the top 100
most influential people in the telecoms
industry in 2010 by Global Telecoms
Business Power 100.
(Image: IT Web)

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Fundamo, a South African-based company specialising in mobile phone-based financial services, has been bought by Visa for US$110-million (R741-million) – a deal which could draw other multinationals to invest in locally developed technology.

CEO and founder of Fundamo, Hannes van Rensburg, said the success of his company is due to innovative ideas and a love for what he does.

“It’s about passion; it’s not all about the money, because that’s when you go astray,” he added.

Aletha Ling, Fundamo COO, is urging other businesses in South Africa to be as innovative to create sustainable jobs.

“I can’t tell you how passionate I am about the idea that South Africa is a great technology place and that we innovate great stuff here. We have an ability to create something global and to create an export industry and maybe to encourage other businesses to create something similar to really create the jobs that matter for the future,” Ling said.

Fundamo, which is a combination of the words “fundamentally mobile”, is owned by a group of South African investors including Sanlam, a financial services provider; Remgro, an investment firm; and HBD Venture Capital, an investment conglomerate founded by billionaire Mark Shuttleworth.

The acquisition of Fundamo is a push by Visa to expand its foothold in the mobile banking sector. It will allow consumers from South Africa to perform transactions anywhere using a card, a computer or mobile devices.

Bill Gajda, Visa’s head of mobile banking, said: “This deal will add significantly to Visa’s ability to extend payment services to the under-banked around the world.

“Through this investment, we can increase the level of innovation. Innovation will accelerate in the country. Using Fundamo’s licence platform model and using its service provider platform, we will be able to take closed looped systems to allow consumers to make more kinds of payments both internationally and locally – through a visa account.”

Van Rensburg and Fundamo management will continue to run the company as members of Visa’s mobile product organisation.

Influential player in telecoms

Van Rensburg was named one of the top 100 most powerful people in the telecoms industry in 2010 by Global Telecoms Business (GTB) Power 100.

The list is compiled using nominations by worldwide readers of GTB.

Some of Van Rensburg’s achievements as founder and CEO of Fundamo include launching the first mobile phone-based financial service with Celpay in Zambia in 2001 and securing one of the largest mobile phoned-based financial service contracts with MTN in a deal worth $9.7-million (R66-million).

“To be included in such a prestigious list is an honour. Mobile financial services are already playing a fundamental and profound transformational role by extending the privileges associated with financial identity and improving economic inclusion to those at the bottom of the pyramid,” said Van Rensburg.

“At Fundamo we look forward to providing financial inclusion to the remaining 1.7-billion unbanked people in the world,” he added.

Mobile money in Africa

Over the past few years Africa has made strides in supplying the public with mobile phoned-based money transaction options.

Kenya’s M-Pesa, a mobile money-transfer option provided by Safaricom, the country’s largest mobile network, was introduced in 2009.

This system allows people to transfer money directly from their phones, avoiding long queues at the bank. Beneficiaries are able to go to any M-Pesa-approved bank and withdraw the cash. The M in M-Pesa stands for “mobile” while pesa is Swahili for money.

In Ghana telecoms giant MTN has partnered with Hollard Insurance and MFS Africa, a mobile financial services provider, to bring low-income earners a product called Mi-Life, a mobile money life insurance policy.

Bruno Akpaka, GM for MTN’s mobile money operations in Ghana, said that Mi-Life is not a generic life insurance system whereby people use phones as a medium to connect to the cash, but rather a product with very low premiums that enables customers to submit claims, queries and make premium payments using handsets.