Mobile commerce network  Monitise (MONI:AIM)  is believed to earn around 15% of its annual revenues from its agreement with  Visa (V:NYSE), a deal that looks doomed beyond 2016. That is part of the fallout from the US credit card giant's decision to invest in its own inhouse network, a move that will at some point see Visa sell its 5.5% stake in Monitise, and saw the UK company's share price collapse by 30% last week to 27.75p.

But there's the possibililty that the bad news may get significantly worse. The market is particularly spooked the markets that other long-term and meaningful commercial partners could walk away, perhaps Visa Europe, FIS or Royal Bank of Scotland (RBS). Visa Europe, a separate entity to the US group, currently owns a 5.95% stake in Monitise.


According to analysts at investment bank Berenberg, joint chief executive officer (CEO) Elizabeth Buse, herself a former Visa executive, emphasised on a conference call two months ago (8 July) that there was no risk to Monitise's long-term relatoinships. That suggests that Visa's decision came as a bolt from the blue. 'If Visa chooses to develop expertise inhouse, why wouldn’t the others?' ponders Berenberg.

Monitise supporters may argue that IBM (IBM:NYSE) might acquire Monitise, the pair sharing a technical development pact. Yet unlike Visa, 'IBM is not a Monitise customer, nor does it own a stake in the UK business,' points out Berenberg. 'Two revenue warnings and now this, we can only see downward pressure on the share price,' say analysts at Panmure Gordon.

Issue Date: 26 Sep 2014