By Duncan Miriri
NAIROBI (Reuters) - Visa (N:V) and Safaricom (NR:SCOM) have agreed a deal which will connect the Kenyan telecom operator's M-Pesa financial services platform with Visa's global network of merchants and cards.
Under the deal, which requires regulatory approval, announced on Thursday by both companies, M-Pesa's 24 million users and 173,000 local merchants will be linked to Visa's 61 million merchants and its more than 3 billion cards.
"This has been the missing link to integrate M-Pesa into the global payments system," said a source at Safaricom, which is Kenya's biggest telecoms operator and is part-owned by South Africa's Vodacom (J:VODJ) and Britain's Vodafone (L:VOD).
The mobile phone-based M-Pesa will serve as a virtual card, allowing users to make payments abroad when they travel and also letting them transfer cash from their Visa-linked debit cards to their M-Pesa wallet even when they are abroad, the source said.
Peter Ndegwa, Safaricom's CEO, said in a joint statement that the deal with will facilitate global electronic commerce, while Andrew Torre, President of Visa Central Europe, Middle East and Africa, said it was committed to creating new and improved payments experiences.
"Safaricom and M-Pesa have already ... put Kenya on the map as a global leader in mobile money," Torre said.
There have been attempts by governments to encourage use of cashless payments to enhance security, while more recently they have been promoted as a way of slowing the spread of the coronavirus through bank notes.
M-Pesa, which was started by Safaricom in 2007, allows users to transfer cash, make payments for goods and services, as well as save and borrow through partnerships with local lenders.
Previous attempts to integrate it with the global payments system include a 2018 deal with Western Union (NYSE:WU), which allows M-Pesa users to send money around the world.
International money transfers, which also include PayPal (O:PYPL) and Alipay, were one of the fastest growing segments for M-Pesa revenue last year, although it remains quite small, Safaricom said on Wednesday.