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Mobile payments are coming: American Express, Verizon, and a ton more are betting millions on it
We’ve all known for years that paying with a mobile phone would eventually be the standard, but it was always a question of how long it would take. More and more, 2011 is looking like the year things really start moving.
Mobile payments provider Payfone announced Wednesday that it has closed a $19 million funding round from American Express, the largest contributor, along with Verizon Investments Inc. (assisted by Verizon Ventures), Roger Ventures and existing investors Opus Capital, BlackBerry Partners Fund and RRE Ventures. The company has raised nearly $40 million since its founding in 2008.
Payfone’s mobile payments platform, called SmartBill, aims to be as seamless as credit cards for consumers and even more accurate for merchants and operators. It’s secure too: the service ties every device’s SIM card, device ID and location to each account, so Payfone can track suspicious behavior.
The glory of Payfone’s business model: “over 5 billion people worldwide currently have mobile phones, while less than 2 billion have credit cards.” This isn’t just about making payments convenient for the current market, it’s about expanding the size of the market by enabling millions more people to pay on the go with a device they already own.
“Mobile payments will form a major cornerstone in operator and merchant digital payment strategies moving forward,” said Rodger Desai, co-founder and CEO of Payfone, in a prepared statement. “We look forward to enabling operators to participate in the transaction flow and benefit from an entirely new revenue source, while driving home our own mission to make the mobile phone number the accepted way to pay.”
As a big step toward realizing that mission, Payfone also announced a strategic alliance with American Express, the major contributor to today’s round, which means the startup will be bringing its mobile authorization and payment services to Serve, AmEx’s just-launched digital payments platform.
Serve, which has been available since the day it was unveiled a little over two weeks ago, is something like PayPal for the mobile era. Anyone can use the website or iPhone/Android app to add money to their account, send money person-to-person or request money from an individual. It’s even got some built-in bonus features, like the ability to automatically transfer funds to another account every so often as well as a “split the bill” calculator.
What Payfone brings to the table is an added option for consumers to tie their actual mobile phone number to various payment methods, allowing them to pay with just that number at checkout.
Payfone will use its newest funding round to continue expanding across North America, Europe, the Middle East, Africa, Latin America and Asia.
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