Companies like Square, Roam and Leaf revolutionized small business by turning mobile devices into wireless cash registers, and Visa predicts the same concept can accelerate financial inclusion.
The idea is to use mobile technology to duplicate the same success products like M-Pesa had in emerging markets, only this time with a focus on businesses. These merchants' customers could then be drawn into mainstream financial services by way of mobile payments.
"It's not just the provisioning of mobile wallets that can grow payments in new markets. It's also the use of the mobile phone as an acceptance device," said Stephen Kehoe, Visa's senior vice president of financial inclusion.
Visa is working with the Alliance for Financial Inclusion (AFI) on a partnership to encourage mobile payment interoperability and other strategies to improve access to financial services in emerging and underbanked economies.
Part of that is creating an ecosystem that advances the use of mobile phones as point of sale devices by bringing together stakeholders such as governments, telcos and issuers to discuss technology and regulatory models that will allow mobile point of sale technology to more easily operate in new markets.
In the U.S., card acceptance devices debuted as free or low-cost options for small businesses that had no easy or affordable way to accept credit cards. While the mobile point of sale market in the U.S. has matured with the addition of merchant services, the basic concept is transferrable to small businesses elsewhere, Kehoe said.
"We are seeing an opportunity for small merchants to be a major driver of low-cost payment acceptance technology," Kehoe said.
Banks and regulators were initially cool toward mobile money programs such as M-Pesa, the telco-led effort that famously accelerated financial access in Kenya and other countries in Africa. Once the market started to grow, the banks and regulators softened their stance.
AFI's membership includes representatives from nearly 100 governments and offers a formal market development dialogue platform for government and private companies. By working with AFI, Visa aims to shorten the time it takes for governments to warm to new payments technology and encourage companies to build payment systems.
"It's not just about issuance; we also have to drive usage of these accounts," Kehoe said.
Separately, MasterCard has worked with Accion's Center for Financial Inclusion and is part of Nigeria's national ID card initiative. MasterCard also recently opened technology development centers in India and is working with Itau Unibanco to develop an electronic payments system in Brazil.
"Visa and MasterCard are both doing a lot of great things in financial inclusion," said Tristan Hugo Webb, associate director of the global payment advisory service at Mercator Advisory Group, adding Visa is playing catch-up to MasterCard right now.
The effort to build interoperable, transferrable mobile and electronic transfer systems is a "big deal" considering the size of the global unbanked market, Hugo Webb said, noting the World Bank estimates the number of unbanked totals around 2 billion. "That's out of a population of 7 billion, so there is still quite a bit of unbanked adults in the world."