Published on July 13th, 2010 | by Babar Bhatti5
Startup with a New Mobile Payment System gets $100 Million Funding
Mobile commerce remains a hot area for innovation and disruption. A start-up called C$ cMoney has an ambitious plan for replacing consumers’ debit and credit cards with a mobile-payment system that sends temporary account numbers across the ether. Recently it received new funding of $100 million to launch its service. Here’s more via WSJ Blog.
C$ cMoney Inc. secured the capital from private equity firm AGS Capital Group to roll out the service in January in conjunction with the nation’s top banks and financial institutions, Chief Executive Jennifer Pharris said.
Houston-based C$ cMoney is one of many companies working on a system that lets consumers use mobile phones to pay for goods. But unlike competitors, cMoney is not using microchips to store financial information, or trying to build readers that merchants would install to communicate with those chips.
Instead, the company’s system will be available to mobile-phone users via a downloadable application that provides a temporary connection to a person’s banking and credit-card information. After opening the application on a mobile phone, the user logs in with a personal user name and password and then specifies the transaction details, before being prompted for a second, different password. The passwords are in place to prevent someone from stealing a phone and using the application.
The user then receives a numeric code which can be used at cash registers, the same way a credit card number can. The code, what the company calls a “ghosted number,” provides the merchant a link to banking information for exactly 15 minutes, before it becomes defunct.
To add an extra layer of security, C$ cMoney plans to set up kiosks inside banks where users can scan their bank and credit cards. While users of the application can also register for the service on a computer, the kiosk is more secure since it provides “a hard line, directly to the bank,” said Tom Shaw, the company’s vice president of marketing. The company is currently negotiating with banks, and using much of the financing to build and install these kiosks.
“Our technology is retail-ready,” Shaw said. “It uses the same interchange system, the same gateways, that credit cards use.”
As for its business model, C$ cMoney plans to collect fees from transactions, determined by a number of different variables, including the size of the purchase and the nature of it – for example, a person-to-person transaction versus an in-store transaction. Transfer of money between cell phones can be as little as 25 cents, the company’s Web site says, and payments are free to the consumer.<
Pharris said C$ cMoney – which in March raised a $15 million Series A funding round from venture firm Kodiak Capital Group – made a conscious decision to raise the larger round from a private equity firm instead of a more traditional venture firm. “VCs want a majority of companies,” she said, adding that AGS was taking a smaller stake than a VC would. “I don’t want to give up those percentages.”
Kodiak, per an earlier agreement with cMoney, did not participate in the new funding round, but has the option to do so in the future, she said.
CMoney has six employees but aims to hire more than 100 over the next few years. The company is also likely to acquire other players in the mobile commerce space, she said.