After operating in stealth for the past 3 years, mobile payment startup Payfone is officially stepping into the fray today after announcing an $11 million Series B financing, the company’s second infusion. While competition in the sector is fierce — see the news today about AT&T and Verizon getting in the business — Payfone and its backers believes the company’s mobile payment platform will turn your phone into your wallet.
Payfone allows users to use their phone to pay for e-commerce purchases and virtual goods, with the charges appearing on a user’s phone bill. Mobile payment startups like Zong and Boku already allow you to do this, using text messages to verify purchases.
Payfone utilizes the inter-carrier roaming network that wireless companies use when users roam to different networks. That network is specifically built for billing, while SMS, the standard for text messages,was created with messaging in mind. This, according to the company and its backers, provides a significant advantage over the competition.
“Payfone was built from the ground up with carrier-grade network technologies that enable highly scalable and reliable one-click billing,” said Payfone CEO Roger Desai.
Payfone’s supports features that are not possible on SMS like freemium billing, variable pricing, refunds and try before you buy.
Opus Ventures led the round with general partner Bob Borchers making his first investment with the firm after spending five years as Apple’s director of international marketing. BlackBerry Partners Fund and RRE Ventures also participated in the round. Borchers and Kevin Talbot of BlackBerry are joining the company’s board.
RRE Managing Partner and Payfone board member Stuart Ellman met the company’s founder Mike Brody in a Columbia Business School class Ellman was teaching over three years ago, according to the Wall Street Journal. He matched him with Desai and incubated the company in RRE’s New York offices, with RRE investing $1.5M in the company prior to today’s funding.
The company plans to use the new round of funding to expand its capabilities outside of the United States.