Pay on the go with a picture of your credit card

Anyone who has ever typed their credit card information on a mobile keypad will appreciate Card.io. The company offers a software-based credit card payment solution for smartphone developers, and they are competing today in MobileBeat’s 2011 Startup Competition in the infrastructure category. (The winner will be announced later today.)

Card.io uses optical character recognition that reads any credit card information from your camera’s phone. This makes purchases instantaneous. Rather than target merchants, Card.io provides an SDK for smartphone software developers who want to enable in-app commerce.

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“Most consumers don’t have separate hardware to swipe a credit card,” says founder  and CEO Mike Mettler. “Hardware makers are not opening up their system to developers, and NFC (Near Field Communication) payments are still one to two years down the road. Being software-based, it’s easier to adapt to the dynamic market and reach users directly.”

Competitors include software providers like RedLaser and Aisle Buyer (for in store purchase only), and hardware providers like Intuit and Square.

“Think of Card.io as Square without the Square,” says Mettler. “The app developer can store the credit card information, but we are more concerned with that initial transaction of getting the data.”

He points out that a card must be scanned every time, unless the app developer stores the data on their own. They also don’t do the actual processing.

“We could do that in the future if there is demand,” said Mettler.

The company was founded by two early AdMob employees: Mettler, CEO and Josh Bleecher Snyder, CTO. Card.io is backed by angel investors including Michael Dearing, a former SVP at eBay known for his Midas touch with startups; Jeff Clavier and Charles Hudson of SoftTech VC; Manu Kumar of K9 Ventures; Alok Bhanot, former VP of risk technology at PayPal and Omar Hamoui, founder and CEO of AdMob.

The investing interest in mobile payment companies is growing. A study released today by KPMG predicts mobile payments could be mainstream within two years, based on a survey of executives in financial, tech, telecommunications and retail industries.