India’s MobiKwik lands $40M from NASDAQ-listed payment firm Net1

India-based mobile wallet startup MobiKwik has landed a $40 million strategic investment from Net1, a mobile payment firm specializing in solutions for the unbanked. Net1 has been listed on the NASDAQ since 2005 and is valued at around $480 million.

As part of the deal, South Africa-based Net1, which is also public on the Johannesburg stock exchange, will integrate its ‘virtual card’ technology into MobiKwik’s wallet app to help its 100,000 merchant partners get access to a wider selection of payments. The technology works by creating a virtual card — as the name implies — using a mobile phone as the identity in order to process transactions like a physical credit card.

“Virtual cards are used like traditional plastic credit or debit cards, except that as soon as the transaction is authorized, the generated card number expires immediately. While it has been focused primarily on card not present transactions for internet payments in our initial deployments, we have the ability to customize the software as industry acceptance increases to incorporate new trends such as presentation through NFC or Quick Response, or QR, Codes,” Net1 explains on its website.

Beyond that, Net1 also offers a payment processor system that uses biometrics, issuing services for Visa, MasterCard and UnionPay, and other payment services.

The company said it is keen to partner with MobiKwik, which claims 32 million users, in order to grow its business in India, where smartphone ownership is growing among the country’s billion-plus population.

“Our strategic investment in MobiKwik provides us with meaningful participation in one of the largest and fastest growing digital payment markets globally,” Net1 chairman and CEO Serge Belamant said in a statement.

“Over the next three years, MobiKwik has targeted having 150 million users and 500,000 merchants, and the introduction of our various technologies is expected to enhance their value proposition and differentiation to users, online and offline merchants, increase acceptance, and accelerate growth,” he added.

MobiKwik — which is rivaled by Alibaba-backed Paytm and FreeCharge, which is owned by Snapdeal, among others — counts Japan’s GMO, Mediatek, Sequoia, Cisco and American Express among its existing backers. The company has raised over $120 million to date including today’s news. Its last financing was a $50 million Series B round that closed in May of this year.