The anticipated global slowdown in remittances has not led to any strategic shifts for Visa Inc. and MasterCard Inc., which spent last year trumpeting their efforts to expand in the sector.

Executives at both companies said they expect the drop in global remittance volume to have little effect on such projects, which they characterized as "longer-term" parts of their growth strategy.

However, both Visa and MasterCard have announced little remittance news since this year, and neither one would provide specific results about the test programs they are running now.

"Even in a contracting industry like remittances, the volumes are still very large," Rob Walls, MasterCard's vice president of product management in the Asia Pacific, Middle East and Africa region, said in an interview last month. "Some of our customers will see that there are good margins to be made in that business even as it's contracting."

Kelly Alpert, the head of Visa's global money transfer initiative, agreed that the global outlook "really doesn't change our money-transfer strategy at all." She defined it as a "long-term opportunity for the company" to use its network, rather than something in which Visa is heavily investing today. "I think that's the mentality that the banks have, as well — we're in this for the long haul."

Analysts said Visa and MasterCard can afford to take this long view, because they are putting relatively little money into their efforts right now, and because neither company has gained much traction in remittances.

Sanjay Sakhrani, an analyst at KBW Inc.'s Keefe, Bruyette & Woods Inc., said he does not include either company's remittance efforts in his models for their earnings. Because Visa and MasterCard have already developed their payment networks, any spending "is mostly research and development and compliance, versus having to build out a whole infrastructure."

Eric Grover, a former Visa executive and the principal of the consulting firm Intrepid Ventures, said: "What the institutional investors want is to slash their marketing spend, rein in expenses, to squeeze the existing model. … Anything you do in money transfer, it's not going to be kicking into earnings this year or next year."

The value of international remittances sent to developing countries grew nearly 16% in 2007 over the previous year, but the World Bank has said the value grew only 6.5% last year, to $283 billion, and will fall nearly 1% this year.

Sakhrani said this slowdown could hinder some investment, though he did not expect a massive change in course from either network.

"I don't know if they'd spend as whole-heartedly as they would" in a better remittance environment, he said. "They're still focused on developing that branch of their business, but perhaps they may pull back on some of that significant spending."

Despite the global outlook, Grover advocated for more aggressive investment by the two companies.

Money transfers and remittances are "a natural extension of their core expertise," he said. "It could be enormous, but they're being far, far too tentative, too cautious in going after it."

Grover blamed some of that reluctance on bank customers, whose participation is necessary for most of the current pilot programs.

"While transactions have been slowing," Visa and MasterCard have "plenty of resources to pursue it, and they shouldn't be paralyzed like some of their bank licensees, he said. "This is a time to seize beachheads when it might be more difficult" later. "They've got capital, they've got resources, and everything they do takes longer than it should. This is a great time for them to be pursuing this."

Some bankers have called for more financial institutions to enter the remittance market to counteract customer awareness of — and reliance on — traditional remittance companies like Western Union Co. and MoneyGram International Inc.

(Last week Visa announced a prepaid debit reloading partnership with MoneyGram, but Visa would not discuss any potential impact of that partnership on its remittance plans.)

Visa sees a "really big opportunity for our financial institution customers to participate in that cross-border remittance space, and we can help them do that," Alpert said last month. "We haven't seen any indication of a slowdown in bank interest of pursuing money-transfer opportunities."

In addition, Visa's bank issuers "are interested in playing in the traditional remittance space," she said. Banks on their own have long "been moving money from one financial institution to another." However, "where we think Visa can help the banks is in offering lower-value transactions and a lot of them."

Walls of MasterCard said that because "remittance from a retail banking perspective in terms of card-to-card transfers is relatively new, we're really working very closely with our customers to make sure that it's seamless."

The expansion could be slow, because of "a lot of competing factors," including variances in technology and regulation of cross-border remittances from country to country, Walls said.

"Because this industry has been around for 100 years, MasterCard's a pretty late entrant into it, so we have to work creatively," he said. "We continue to evolve. We're certainly aware of those challenges," and "how it looks today is not how it may look in one to two years."

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