American Express bets on Payfone for mobile payments

Mobile payments is a toughly contested battleground, with everybody from small start-ups to cell phone operators and banks trying to get as big a foothold as possible. One of those start-ups, Payfone, disclosed today a $19 million round of funding and a serious backer, American Express.

Payfone enables people to use their cell phones as a means of payment, to complete transactions for e-commerce purchases and virtual goods with the charges showing up on the phone bill. Payfone wants to make the mobile phone number the way to pay: After all, there are 5 billion people with cell phones around the world, and less than 2 billion credit card holders.

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Even though plenty of companies are getting serious about mobile payments (Boku, Square, Zong, Mastercard, Visa, Nokia, Apple—you name it), no one has emerged as the winner so far. That likely explains why American Express is getting on board with Payfone. Said Group President Dan Schulman from American Express: “The payments industry is going through a fundamental transformation, with the move to digital payments becoming the primary driver.” More to the point, American Express wants to evolve its own digital payments platform, Serve, with Payfone’s expertise.

In addition to the credit card company, Verizon Investments, Rogers Ventures and existing shareholders Opus Capital, BlackBerry Partners Fund and RRE Ventures joined in the round. Payfone scored $11 million last August and seems to be piling up money at a fast pace. (The company was founded in 2008.) Payfone plans to use this round of funding to continue product development and global expansion.

[Photo credit: The.Comedian]

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