Virtual goods have become one of the most popular ways for online social networks and gaming companies to turn a buck -- but the space is getting awfully crowded, making it perhaps ripe for consolidation. The newest brave startup to enter the market is OneTXT, which specializes in virtual good payment systems. It just raised $2 million to get started.
Based in New York, the company says it is different from its competitors because it doesn't depend on any side transactions for successful transfers (many others require Visa to complete another transaction). It uses the same programming language as banks, called JPOS , to secure every exchange. This gives users the option of paying directly from their bank accounts, with credit cards, debit cards, or in the form of money transfers (like Western Union). The platform runs on the iPhone, all BlackBerrys and the Palm Pre.
Based in New York, the company says it is different from its competitors because it doesn't depend on any side transactions for successful transfers (many others require Visa to complete another transaction). It uses the same programming language as banks, called JPOS , to secure every exchange. This gives users the option of paying directly from their bank accounts, with credit cards, debit cards, or in the form of money transfers (like Western Union). The platform runs on the iPhone, all BlackBerrys and the Palm Pre.
Social networks and games will offer the branded OneTXT system alongside other payment options. This is an interesting choice for the startup -- not only will it go head-to-head with other payment systems, but it doesn't exactly have the name recognition to convert PayPal users yet. Not only that, but users must enter their phone numbers into the OneTXT system, something many online shoppers are hesitant to do. To encourage users, the company will offer rewards and loyalty programs, like points toward free gifts, etc., but it's unclear whether this will be enough. If it doesn't succeed outright, it could be attractive acquisition bait for a bigger fish.
In addition to PayPal, OneTXT will need to fend off competition from MoneyBookers USA, Payment One Corp., and Boku (which also asks users for phone numbers because it brokers transactions through mobile carriers).
Metamorphic Ventures led OneTXT's recent round of funding, joined by KPG Ventures, New York Angels Fund and a bevy of notable angels: former Google executive David Hirsch, 24/7 Real Media co-founder Geoffrey Judge, former DBAdvisors CEO Roger Ehrenberg, and former head of TD Capital Mark Michel. The company has no prior funding history.