Expanding its electronic payments network in Sub-Africa, on Thursday, MasterCard Inc. (MA) announced a Memorandom of Understanding (MoU) with Togo-based Ecobank Group, which will allow the former to do business effciently across Africa.
Accordingly, the MoU will help MasterCard tap more than 30 Sub-African markets where Ecobank, the leading banking group, operates with more than 1,100 branches. Additionally, Ecobank also holds its operations internationally with offices in Paris, London and Dubai.
The main objective of the MoU is to discover new business opportunities that include accessibility of MasterCard’s diverse card products and services across Ecobank’s extensive outlets. Such business developments are expected to drive long-term growth, while also enlarging MasterCard’s global footprint.
As part of its long-term growth strategy, MasterCard has been attempting to implement mobile commerce in emerging markets of Africa and Middle East, through its prepaid, debit and credit card products. The company is also working to tap other electronic payment platforms, such as ATMs and point of purchases.
Consequently, these initiatives have helped MasterCard cardholders to access funds at over 1.5 million ATMs globally and pay for products and services at over 32.9 million locations and in 210 countries and territories where MasterCard cards are used internationally.
In line with the objective to penetrate emerging markets, on Tuesday, Mastercard also announced a joint venture (JV) with Brazil-based telecom operator Telefónica S.A. (TEF), whereby mobile payment services will be offered to 65 million Vivo consumers through the mobile wallet initiative.
Payments and fund transfers can now be made through mobile phones, thereby enhancing MasterCard’s e-commerce experience. The JV will be owned by both the parties equally. However, the initiation of JV is subject to approval from respective authorities.
Expanding its global footprint and primarily in the unsaturated markets is crucial for enhancing MasterCard’s competitive leverage, given the market demand in the rapidly growing electronic payment industry. This also creates competitive pressure against arch rivals, particularly Visa Inc. (V). Nevertheless, the company has achieved the position to consistently maintain availability of its core global processing systems as well.
Hence, based on the strong fundamentals, MasterCard warrants a Zacks #2 Rank, implying a short-term Buy recommendation. However, the long term stance remains ‘Neutral’.
On Friday, the shares of MasterCard closed at $346.20, down 0.2%, on the New York Stock Exchange.
MASTERCARD INC (MA): Free Stock Analysis Report
TELEFONICA S.A. (TEF): Free Stock Analysis Report
VISA INC-A (V): Free Stock Analysis Report
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment