Payfone

With 1-Touch Checkout, a consumer registers once to Payfone through their mobile banking app. Now, if they make a purchase at any merchant signed up with “1-Touch Checkout”, their billing and shipping information is automatically linked to their mobile phone identity; all they have to do is choose what to buy, click checkout, then confirm. Payment information is then relayed to the merchant, who then processes the credit card information normally.

Though Payfone uses the SS7 network, the company does not own the “keys” to the network. SS7 is owned by the MNOs and managed by companies like Roamware, which use the protocol to trace cellphone users and ensure that they have a connection to their home network. Payfone simply uses this existing infrastructure to create mobile identities that facilitate payments.

BUSINESS MODEL

Payfone licenses its payment solutions to merchants, payment companies and mobile networks. Whereas BOKU and Zong companies generate money on a per-transaction basis, Payfone has embraced the white-label pay for service model. It partners with mobile service providers like Verizon or credit card companies like American Express, and does most of its work behind the scenes. The Verizon partnership, for instance, allows Verizon customers to make bill-to-mobile payments in the way mentioned above while also receiving the perks of smart payment routing through the SS7 network and added security. Through the American Express partnership, Payfone will help operate payment transactions through AmEx’s “Serve” program, allowing users to pay for products with only a mobile phone number.

These differences have allowed Payfone to branch out from serving only digital goods merchants; they have now reached out to a broad array of companies including online merchandisers, restaurants, retailers, hotels, and travel agencies.

FINANCIALS

To date, Payfone has a total of $36 million invested from private equity. $6 million of this came in their venture capital round in 2010. They raised an additional $11 million and $19 million in August 2010 and April 2011, respectively. Their key strength seems to be their wait-and-see approach, finding out what works, then providing the services as an intermediary rather than appealing directly to the consumer. Recently, they claimed to have over 400,000 merchants on board, but these may include partnerships formed by Verizon and American Express.


#7 in the Series ABCs of Payments. The ABCs of Payments will examine a new company or innovation in mobile payments each week.

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2 comments on this post.
  1. ysoungo:

    Is there any Payfone’s product for students? I am going to graduate from university. I need a student model cellphone to use in my daily life conveniently.

  2. Temitayo:

    That is a great way of doing things is using your cell phone to conduct transactions. Using your cell phone to make payment will be great if the service is secured.

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