New payments company Clip raises $1.5 million

Clip, which markets itself to the Spanish-speaking world, is first launching in Mexico

(Updated to reflect comment from Clip, as well as the spelling of  "Adolfo Babatz")

The mobile payments space is very crowded, with many big names, like Square, Google and PayPal, out there vying for a piece of the pie. So how does one company distinguish itself from all the others? By catering to the largest growing population in the country.

Clip, a new mobile payments company  that markets itself to the Spanish-speaking world, launched  Tuesday. In addition, the company also raised $1.5 million in funding from a group of investors that include Accion, Alta Ventures, Karl Mehta, 500 StartUps, Angel Ventures Mexico, and other Angel Investors in the U.S. and Mexico, Clip co-founder, and CTO, Vilash Poovala told VatorNews.

This is the first money the company has raised, and it will be used for customer acquisition, fraud management development, and hardware development, said Poovala.

The company was founded by Adolfo Babatz, who formerly worked at PayPal where he was in charge of the company's engagement in Latin America, and Vilash Poovala, the company's current CTO.

Clip, whose product design is Redwood City, Bay Area, while sales and pperations are based in Mexico City, works by turning mobile phones into card terminals. Users insert the reader into the headphone jack of an iOS or Android device, which will open up the free Clip App. A user then enters the amount to be charged and swipes their card on the reader.

After the card is read, cardholders are asked for their cell phone number and receive a 4-digit SMS code that they enter on the merchant's Clip App. If the code matches, the customer signs and receives their receipt via SMS or email. 

The service is  first launching in Mexico, and it plans to follow in other Spanish-speaking countries, including the Hispanic market in the United States.

Right now, in Mexico, only 400,000 out of 5.5 million merchants currently accept cards, because of paperwork, fees and the need to develop multiple acquiring relationships in order to accept different payment methods. Clip obviously sees a big opportunity to break into an emerging market.

And, by catering to the Latino community in the United States, the company should have a leg up on some of its competition, as it is the fastest growing population in the United States.

"There are many similar product offerings in the US which uses SSN for on-boarding merchants, this will not work in countries like LATAM that have no consumer credit bureau. There is also an amazing opportunity to address the needs of the millions of business in the US that are underserved," said Poovala.

There are roughly 52 million Latinos living in the U.S., according to a study from the Pew Hispanic Center in February. That means that they now make up 17% of the population of the United States, up from 13% in 2000. Between 2000 and 2011, the Hispanic population grew 48%. 

The population is growing so fast, in fact, that in 30 years the country will no longer be majority Caucasian, the first time that will ever be the case.

"We believe that our branding, identity is very cohesive so our consumers and merchants can come to trust and identify the brand with simplicity, and safety," said Poovala.

Clip can make a name for itself if it can be the dominant mobile payments company for this community.

The mobile payments space

While setting its sights on the Spanish-speaking world will give Clip the opportunity to cater to an underserved, and fast growing, population, it still has some big competition.

There is Square, which uses an a square shaped dongle that allows users in the United States to accept credit cards through their iOS and Android mobile phones by swiping their credit card on the Square device.

in August of 2012, Square struck a deal with Starbucks, which allowed Square payments in 7,000 Starbucks locations around the United States.

There is also Groupon, which debuted Groupon Payments in September 2012. The payments system is built right into the Groupon Merchants app, means a merchant can swipe a card and do a transaction while also redeeming deals and updating their analytics to note how many deals have been redeemed, what the average bill looks like, and how much has been spent altogether.

And then there is PayPal, which has also gotten into payments, partnering with 16 national retailers in May of last year and then adding seven more in January. Most recently PayPal teamed up with Gas station checkout solution Gilbarco Veeder-Root to bring digital payments, and other mobile solutions, to the company's gas stations and convenience stores.

And, of course, Google, whose Google Wallet mobile payment system  debuted in March 2011. It allows users to store debit, credit, loyality and gift cards. The system uses a "tap and pay" function wherever Mastercard PayPass stations are used. Users can pass their Google Wallet-functional mobile devices over the paypass stations to pay for retail purchases, the same way they could with a credit card.

While Wallet has been seen as something of a disappointment, Google recently decided to double down on it, announcing earlier this month that it was getting rid of Google Checkout so that all merchants and developers has to switch to Wallet instead. 

Those are some might heavy hitters, and it will be interested to see if the Spanish-speaking community can make Clip just as powerful.

(Image source: https://payclip.com)