Visa Sees a Big Future in Africa

by Trefis Team
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Visa Inc (NYSE:V) and the Government of Rwanda recently announced an agreement to develop solutions that will facilitate access to financial services for customers around the country. Visa aims to generate 50% of its revenues from markets outside of the United States by 2015; such public-private partnerships will help Visa extend its products to geographies like Rwanda where electronic payments are limited today. Under the agreement, Visa will modernize Rwanda’s payment networks, upgrade ATMs, install merchant card readers, develop e-commerce capabilities and provide financial education to the country’s 11 million citizens. [1] Visa is the largest payments network in the world and competes with MasterCard (NYSE:MA), American Express (NYSE:AXP), Discover Financial (NYSE:DFS) and Capital One (NYSE:COF).

See our full analysis of Visa here

We have a price estimate of $90 on Visa’s stock, about 10% below its current market price.

African nations are at the top of Visa’s list of countries for business growth. Last month, the company announced a plan to create prepaid accounts linked to mobile phones across Africa as it aims to capture transactions from a majority of people in the region who are still unbanked or under-banked. (See Visa is Tapping Huge Growth in Mobile Banking Volumes in Africa)

Rwanda, in which 80% of the population lacks access to traditional financial services, is an ideal place for Visa to set up financial infrastructure that will provide future growth. According to Visa’s group president, Elizabeth Buse, Visa intends to replicate its actions in Rwanda across other developing countries. [2] A developed financial infrastructure in Rwanda and other developing countries would promote cross-border trade and thus boost Visa’s international transaction gross dollar volume.

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Notes:
  1. Visa-Rwanda Partnership to Drive Electronic Financial Services, Press Release, Visa Inc, Dec 5, 2011 []
  2. Visa Develops Rwanda Payment Network, Bloomberg, Dec 5, 2011 []
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