Rixty lets young users without credit cards make buys online

Rixty, maker of a payment app that lets people buy entertainment online even if they don’t have credit cards, has brought in $1.24 million in a seed round of funding. The San Francisco company, which lets people turn cash into online currency, is part of a slew of companies expanding the customer base for virtual goods, virtual worlds, and social networking purchases — particularly adding many younger users who don’t have bank accounts yet.

Rixty accomplishes this by partnering with online and retail vendors. Its users can buy credits to spend online from about 20,000 different physical locations — including anywhere that has a Coinstar kiosk. Ubiquitous at grocery stories, these machines are used to change coins into bills for a small percentage. When Rixty users dump their change into one of the kiosks, they receive a PIN number that allows them to add credits to their online accounts — credits that are accepted by a variety of web sites, worlds and games.

So it’s not hard to see why partnerships are Rixty’s lifeblood. In October, it expanded the number of online properties accepting its virtual currency to 19, adding names like IGG, HitGrab, Roblox, Lizard Interactive and NetDragon. At that time, the company said its average user was spending more than $40 in cash on credits to spend. Growing the number of ways to spend this money will up this average, it hopes. That’s why most of its recent round of funding will go toward building even more of these relationships with sites looking to appeal to the younger crowd.

Javelin Venture Partners led the financing, which also included Accelerator Ventures, First Round Capital, Freestyle Capital, Nueva Ventures and SoftTech VC, in addition to several angel investors.

Rixty says it is growing fast, tripling its number of transactions in the last half year. It competes with other payment systems built into sites like vSide, GamesCampus, Perfect World and Ntreev.