When we last covered PayNearMe in early September, the company (previously Kwedit) had just launched and had high hopes for the future of cash payments without the need for banks or cards. Two months later, the company is doing pretty well for itself: PayNearMe announced Tuesday the close of a $16 million Series C round of funding led by Khosla Ventures, with participation from August Capital, True Ventures, and Maveron. The company also announced its new mobile platform that will allow anyone with a mobile phone to make e-commerce payments, loan repayments, or even purchase e-wallet funds without a card or bank account.
In September, PayNearMe introduced its revolutionary new payment system which allows any user to make payments for online purchases or loan repayments by confirming the transaction online, printing out the receipt, and taking it to the nearest 7-11 where they can complete the transaction in direct cash, simply by paying the cashier at the counter. While this can be adapted to fit just about any consumer need, from paying collection agencies to purchasing Facebook credits, this is particularly exciting news for unbanked and underbanked families.
The terms “unbanked” and “underbanked” refer to individuals or families who either have no bank account or have limited—if any—access to mainstream financial services, like loans. Roughly one-quarter of the U.S. population is either unbanked or underbanked, and many of those individuals are left at the mercy of loan sharks and high-priced check-cashers. But PayNearMe CEO Danny Shader gave me an interesting statistic: “If you look at households in the U.S. that have an income below $30,000, 37% of those have Broadband, and even more have mobile phones.”
Thus, e-commerce sites like Amazon have, until recently, been missing out on a huge chunk of the population. So it makes sense that Amazon was one of the first businesses to partner with PayNearMe, along with Facebook.
Now, with PayNearMe’s new mobile platform, Web users won’t even have to spend money on printer ink. Users can now make payments by providing their mobile number to a business, getting a free PayNearMe card from one of the 6,000 participating 7-11s and texting the card’s number to PayNearMe, and then giving the card plus the cash back to the cashier to complete the transaction.
The PayNearMe system is a great resource not only for individuals without bank accounts or credit cards, but even just those who are concerned about their privacy. When I asked Danny Shader about emerging trends and statistics among those using the PayNearMe system, he pointed out that he really doesn’t know much about the people who are using PayNearMe because the transactions are in cash; aside from that, very little, if any, personal data is being exchanged.
“We look to work with great entrepreneurs in big markets undergoing disruptive change,” said David Weiden, General Partner at Khosla Ventures, in a prepared statement. “Danny has brought together a terrific team, and we are confident payment services with otherwise un-banked and under-banked consumers will change fundamentally over the next decade.”
This round brings PayNearMe's total funds to $22.3 million. The company plans to use the new funds to expand to include more retailer payment locations and payees, as well as to support the development of new services, which, in the future, will likely include mobile payments by scanning a barcode with one’s phone.
image source: paynearme.com