MasterCard, Monitise Ally to Boost mCommerce - Analyst Blog

In an attempt to boost its mobile money services, MasterCard Inc. MA announced a strategic alliance with London-based global mobile application provider for various banking and payment services – Monitise Plc to accelerate mobile commerce (mCommerce) globally. Additionally, the company also plans to buy a minority stake in the latter, the value of which remains undisclosed.

MasterCard has been aggressively working toward developing mCommerce for over a decade now. The company was also the leader of digital wallet innovation for making payments from mobile devices through applications that are secured, convenient and user-friendly.

Hence, MasterCard's collaboration with Monitise appears reasonable as the latter enjoys a huge expanse of network, which strengthens the former's competitive edge in the global market. Armed with a strong grid of over 350 renowned banks, merchant partners, payment processors and other financial institutions, Monitise processes about 3.5 billion transactions and initiates payment volumes worth $70 billion annually, serving 28 million registered users globally.

Additionally, both MasterCard and Monitise aim at reaching out to the remotest rural areas of the emerging markets through such collaborative initiatives. Overall, these attempts are expected to augment their respective core processing capabilities in an increasingly complex payments environment, thereby reflecting their endeavors to adapt themselves to the emerging industry trends, while also offering a secure mobile shopping experience.

Such partnerships are also aimed at increasing brand loyalty while adding an incremental revenue stream, particularly, given the regulatory cloud that burst over the card industry in mid-2011.

Apart from MasterCard, other card giants are also seeking greener pastures through newer initiatives, including the expansion into prepaid cards, mobile banking and electronic commerce (eCommerce). In 2012, Visa Inc. V had also announced a joint venture with Monitise in an effort to develop mCommerce offerings. Overall, we believe such efforts will not only shower ample organic growth opportunities and diversify business portfolio but will also augur long-term growth for MasterCard going ahead.

While both MasterCard and Visa carry a Zacks Rank #3 (Hold), some better-ranked stocks in the financial sector include Tree.Com Inc. TREE and Discover Financial Services DFS. Both these stocks bear a Zacks Rank #2 (Buy).