MasterCard Betting Big on Mobile Payments with mFoundry

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MasterCard (NYSE:MA) recently announced that it has partnered with mFoundry to make mobile payments accessible to more consumers. mFoundry is a leading mobile banking solutions provider in the U.S. and provides solutions to more than 560 banks and credit unions in the country. The collaboration of mFoundry with MasterCard will enable more banks and credit unions to give their customers the option to pay for items using their mobile phones. [1] In addition the partnership, MasterCard has also made a strategic investment in mFoundry. The $18 million investment was led by MasterCard and includes Intel Capital, FIS and Motorola Mobility. MasterCard competes with Visa (NYSE:V), Discover Financial (NYSE:DFS) and Capital One (NYSE:COF)

We have a price estimate of $353 on MasterCard’s stock, about 10% below the current market price.

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See our full analysis of MasterCard here

The deal will combine MasterCard’s NFC-based PayPass technology with mFoundry’s mobile financial services platform and will enable mFoundry’s customers to use its services on existing PayPass terminals. According to mFoundry, the funds will be used for the development of new mobile payment products and expansion of mobile banking business. [2]

MasterCard is aggressively pushing the adoption of its PayPass technology, which is already a part of Google Wallet. With its partnership with mFoundry MasterCard is looking to expand its footprint through banks, credit unions and other financial institutions. The number of transactions processed by MasterCard is increasing at a rate of about 10% annually and we expect it to reach $52 billion by 2018 fueled by growth in mobile payments.

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Notes:
  1. MasterCard and mFoundry Partner To Offer Banks and Credit Unions More Mobile Payment Options, Press Release, MasterCard []
  2. Intel, MasterCard, Motorola Mobility Put $18M In Mobile Banking Platform mFoundry, Techcrunch, Dec 5, 2011 []