Visa leads $40M in TrialPay’s alternative payments business

Visa has led a $40 million investment round in TrialPay, one of the leaders in alternative payments known as offers.

Mountain View, Calif.-based TrialPay will use the money to expand into new markets and innovate in “transactional advertising.” TrialPay’s business includes ads known as offers, where users agree to watch a video or sign up for a subscription as a way to pay for a virtual good in a game or other kind of app on social networks such as Facebook.

Alex Rampell, chief executive of TrialPay, said in an interview that the company just finished its fastest growth year in history. He said the money will be used for international expansion and to extend TrialPay so that its online offers can be used in offline transactions.

“Soon, you will be able to get a card through an online transaction and then use it to buy merchandise offline and then get virtual coins in a game,” Rampell said. “We have this traffic online and want to be able to send it offline where people spend most of their money.”

In other words, you can receive an offer online that incentivizes you to buy goods at a store or eat at a certain restaurant. When you do so, you could earn virtual currency to spend in your favorite online game.

Besides Visa, other investors in the round include Greylock Partners, T. Rowe Price, DAG Ventures, DFJ Growth and QuestMark Partners, with existing investors also putting in money.

“TrialPay’s approach to payments is different,” said Reid Hoffman, Partner at Greylock Partners. “Their tremendous growth in the last year validates the efficacy of the model. We believe that the next generation of e-commerce depends on the ability to maximize revenue from every transaction, and TrialPay is the only company that has successfully leveraged global advertiser relationships to meet that end.”

Since 2006, TrialPay has provided more than 150 million online shoppers and 10,000 sites with alternative payments. Such “transactional advertising” now drives hundreds of millions in revenue globally for merchants in business segments including social games, software, mobile apps, retail and online services, the company said.

TrialPay saw a 7X increase in transaction volume in 2011 and a 4X increase in traffic compared to a year earlier. Now the transactional ad platform reaches more than 70 million monthly active users. Rivals such as Offerpal Media, now known as Tapjoy, faded from Facebook after a scandal tarnished the company, when TechCrunch exposed scam-like offers that signed users up for services they didn’t realize they would be paying for. After that scandal, Facebook focused on TrialPay as its main vendor for alternative payments.

TrialPay has 130 employees and will hire aggressively in 2012, Rampell said.