OneTXT Closes $2M Series A Round For Mobile Payments

By Chris Sherman On June 23, 2009 · Leave a Comment

The mobile payment space may well be entering a boom period. Start-up OneTXT announced that it has closed a $2 million round of Series A financing lead by Metamorphic Ventures. The round is joined by KPG Ventures, the New York Angels Fund, and several individual angel investors. With offices in both New York and San Francisco, OneTXT is entering the mobile payments field specifically to support transactions on social networks and online games. In addition to simply taking payments by mobile phone, OneTXT allows partners to create loyalty programs and send marketing messages to buyers.

"oneTXT has built an integrated solution that has the potential to
transform the way social media thinks of transactions solutions," said
Roger Wood, Chairman and CEO of oneTXT. "Online transactions solutions
like iTunes and Amazon’s 1-Click are optimized for e-commerce. oneTXT
approaches the marketplace with a belief that transactions between
audience members and the social media brand itself are the true business
model for all social media. Our hypothesis is that the payments world of
tomorrow will look very different from the one which made PayPal a
juggernaut with eBay’s momentum."

In addition to the investment round, OneTXT also announced the hire of former iVillage CTO and SVP Richard Caccappolo as new President and COO. Tech start-up veteran Lucy Hood was also announced as the start-up's independent board director. OneTXT is clearly a venture with some serious muscle behind it, despite the fact that mobile payment in the US is still hobbled by high carrier transaction fees. The space is also increasingly competitive, with high-powered start-up Boku exiting stealth mode just last week.

Where OneTXT clearly hopes to set itself apart from other competitors is by using the Web to help avoid stiff carrier fees. Instead of routing payments through the user's mobile number, OneTXT instead tethers the number to a more conventional sort of online payment method like a checking account or credit card. The mobile number simply makes the payments process more convenient and mobile, especially for your average smartphone user.

Where this approach could hurt OneTXT is that it loses one of the conventional benefits of mobile payment, the ability to reach young and unbanked users who are eager to spend on virtual goods and other microtransaction items. Generally users who are most interested in mobile payments don't actually have access to credit cards, either, or prefer not to use them. Still, OneTXT's approach may find more traction with users who already have credit and aren't interesting in paying the massive premiums involved in true mobile payment.