Early today, Visa Inc. (V) announced a deed of collaboration with the government of Rwanda, to expand its electronic payments processing platform across the Sub-Saharan African country.
Rwanda has a dense but primarily rural population, whose economy is based mostly on subsistence agriculture. However, the region is rising up to the developmental needs of the time and hence, the government has charted out a ‘Rwanda Vision 2020 Plan’.
This plan calls for development through improved education, infrastructure and privatization, which has further helped Visa to penetrate the market of Rwanda. The country’s long-term vision also sees per capita income growing to $1000 by 2020 from $220 in 2000.
As part of the alliance program, Visa is positioning itself to set up a financial service platform in Rwanda by boosting the country’s ATMs, online banking and shopping along with installing merchant card readers. Besides, the company will also be developing eCommerce opportunities and organising educational programs to create financial education to the Rwanda citizens.
The pact with Rwanda government also juxtaposes Visa’s long-term target of increasing its revenue share from international markets to about 50% by 2015. Visa’s international revenues accounted for 41% in fiscal 2010 and about 44% in fiscal 2011.
Hence, the public-private partnership between Rwanda and Visa is expected to benefit both the parties mutually, whereby Visa will enhance the country’s financial services by launching its electronic payments platform.
Such partnerships are also aimed at increasing brand loyalty while adding an incremental revenue stream, particularly, given the regulatory cloud that burst over Visa’s primary debit interchange fee in mid-2011. The regulatory challenges has diverted Visa’s synergies to the rapidly growing eCommerce, mobile banking and prepaid cards so as to reach out even to the unbanked consumers across developing nations of Africa, Asia and Mid East.
Overall, Visa is making vigorous attempts to augment its core processing capabilities and maintain its competitive position, primarily against its arch rival, MasterCard Inc. (MA), in an increasingly complex payments environment, primarily through the strategic technology acquisitions and product innovation. The earlier digital wallet initiative, the CyberSource, Fundamo, Monitise and PlaySpan acquisitions, further reflect Visa’s endeavours to adapt itself to the emerging industry trends.
On Friday, Visa closed at $97.20, down 0.6%, at the New York Stock Exchange.
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