In one of the most significant alliances yet in the mobile payments market, Visa International and Monitise have entered into a development agreement which will be underpinned by Visa’s acquisition of a strategic stake in the UK mobile payments specialist.
The alliance, described by Monitise’s CEO Alastair Lukies as a “landmark” in the mobile payment market, includes a five-year contract with Visa worth $13 million to Monitise in addition to ongoing licence, service and development fees. As part of the alliance, Visa’s head of global product innovation, Tim Attinger, is to join Monitise’s advisory board.
Developments targeted under the agreement include payments, money transfer, transaction alerts and mobile marketing offers to support Visa’s mobile payments strategy.
Under the agreement Visa will, together with existing major shareholders UBS Global Asset Management (UGAM) and Capital Group, subscribe for new ordinary shares in Monitise at a price of £0.07 ($0.11) per share. The issue, which will raise £5.1 million in new capital, will leave Visa with a 14.4 percent stake in Monitise and UGAM and Capital Group with stakes of 12.9 percent and 5.8 percent, respectively.
According to Monitise the £5.1 million raised in the share issue will boost its cash resources to about £15 million. In June 2008 Monitise raised £11.8 million in a share issue that added UK banking group Standard Chartered and Hong telecommunications company PCCW to its list of shareholders.
Established in 2003 Monitise has yet to turn cash flow positive and for the year to 30 June 2009 again anticipates reporting an operating loss. In the previous financial year Monitise reported a pretax loss of £14 million.
Revenue is however improving with an 80 percent increase to £2.7 million forecast for the 2008/09 financial year. The company notes that the number of consumers using its technology will reach 1 million by the end of 2009.
Monitise reports that it is also currently in negotiations for “strategically important transactions” in India, Asia-Pacific, the Middle East and Africa.