Micropayment firm BitPass (Palo Alto, Calif.) has received $11.75 million in its latest round of funding. The company intends to use the infusion to bolster its claim on the emerging market for small-value Internet payments. TowerGroup estimates that Internet and mobile micropayments will reach $11.5 billion in U.S. revenues by 2009, up from $2 billion last year.
Among the investors is RRE Ventures, co-founded by James Robinson III, chairman and CEO of American Express from 1977 to 1993. He will also join BitPass' board of directors.
Since several small transactions can be costly to process individually, micropayment firms such as BitPass have taken pay-once, spend-often approach. Customers can fund their accounts using Visa, MasterCard, Discover, American Express or PayPal in increments as small as $3.00. "These are essentially prepaid accounts in nominal amounts," says Robinson. "You refill the account with 10 or 20 dollars, and when you use that it refills again, either automatically or by a push of a button."
The harder part is getting worthwhile content partners, such as online music providers or popular multiplayer gaming sites. Indeed, the micropayments company that can align the largest content providers may have a decided advantage in the emerging market now taking shape. "It's the convergence -- of not just small companies, but small and large -- and consumers' willingness to pay, and interest in an easy-to-use, simple process that attracted us to BitPass," Robinson notes.
RRE Ventures also holds a stake in QPass (Seattle), which enables wireless carriers to offer premium services.