Monitise has picked up some well-heeled backers to fuel its move into global markets, as MasterCard, Telefonica and Santander join to take a stake in the mobile technology company.
The three companies will make an aggregate investment of about $78 million in Monitise, which will be about 8% of the technology company's share capital, Monitise said today. The new investment comes as Visa "reexamines" its relationship with Monitise and lessens its stake in the company.
"The alliance with MasterCard is interesting, as it is stepping into a gap left as a result of Visa recently reducing its investment in the company," said Andrew Copeman, an analyst for Aite Group.
MasterCard, Telefonica and Santander will provide scale and access to markets around the world, Copeman said. In a separate partnership, Monitise will work with IBM to deploy Watson, IBM's cognitive computing and machine-learning system.
Monitise did not provide an executive for an interview by deadline, and Visa and MasterCard did not return requests for comment. In a press release, Monitise said the proceeds from the latest investment would fund business development and acceleration of investment in technology.
Monitise co-CEOs Alastair Lukies and Elizabeth Buse who was previously Visa's executive vice president of global solutions explained in a video that the new investment is an "endorsement" of the company's strategy to evolve from a licensed software integration provider to an enabler of digital commerce. The executives also said the investment would help Monitise reach a goal of becoming profitable by 2016.
"It feels hard to separate from the news that Visa is reviewing its ownership," said Gareth Lodge, a senior analyst at Celent. "The key part of the [Visa] announcement for me was that Visa was building more in-house capability, implying some to think that it's pulling away from Monitise."
MasterCard had earlier announced a collaborative partnership with Monitise, a relationship that was expected to provide a minority stake for the card network. MasterCard has also made a number of internal and external investments in the past year to broaden its reach into mobile commerce.
The investments in Monitise come from parties that are active on an international scale, Copeman noted.
"Santander has a significant presence in almost every Latin American country and has a presence in New England," Copeman said, adding the bank's large European footprint includes Spain, Portugal, the U.K. Germany and Poland.
Following the investment, Monitise will support new mobile money capabilities for Santander. Telefonica will work with Monitise on rollouts in Latin America, and Monitise and MasterCard will jointly develop new services such as cross-border mobile remittance, mobile transfer technology and cloud-delivered services for financial institutions, merchants, digital service providers and the public sector.
"Telefonica is a large international telco with a strong presence in Latin America, but a broad international footprint covering large parts of Europe, and with a presence in the U.S.," Copeman said, adding Telefonica is one of the world's largest mobile network providers. "MasterCard, of course, needs no introduction."
But there is a drawback to working with such large investors, Copeman said.
"My main caveat is whether the close relationship with Santander will mean that Monitise finds it more difficult to attract other major banks as clients," Copeman said, noting that Monitise's strategy is to partner with banks, rather than disintermediate them from the mobile payments process. "This remains to be seen, but I am sure the company will have factored this into its thinking."