(Reuters) - Visa Inc said it would buy Fundamo, a South African mobile financial services firm, for $110 million in cash, as the world's largest credit and debit card processing network looks to grow its mobile payments business.
Visa has been increasingly looking for growth from new technology, including mobile phone and online payments, faced with a saturated U.S. market for credit and debit cards.
Competition in the sector is heating up with Google Inc, Citigroup, and Visa's rival Mastercard joining up to enter the pay-by-phone system.
The company said the acquisition would hurt its earnings per share slightly for the year ending September 2011.
Hannes van Rensburg and the Fundamo management team will continue to contribute to Visa's mobile product offerings.
The company also signed a new, long-term commercial agreement with Monitise Plc, a provider of mobile money solutions for financial institutions.
Visa's shares closed at $76.71 on Wednesday on the New York Stock Exchange.
Shares of Monitise were up 8.6 percent at 28.5 pence at 1040 GMT on Thursday on the London Stock Exchange.
(Reporting by Jochelle Mendonca in Bangalore; Editing by Joyjeet Das)