The micro-industry forming around micro-transactions is now going through some micro-consolidation. PlaySpan, which is quickly racking up micro-payments across hundreds of video games and virtual worlds, is acquiring Spare Change Payments, a startup which focuses on micro-transactions for social networking apps. The value of the cash-and-stock deal was not disclosed.
PlaySpan raised $16.8 million in a series B funding just last February from Easton Capital Group, Menlo Ventures, Novel TMT Ventures, and STIC. The startup was famously founded by a 12-year-old, Arjun Mehta, but it is really run by his father, CEO and co-founder Karl Mehta.
The company has processed more than $50 million worth of micro-transactions through its PayByCash and Ultimate Game Card products. While its focus so far has been games and virtual worlds, it recently began making its own forays into social networks with a deal to power some micropayments on hi5. But Spare Change already has more momentum on social networks. It powers micropayments across 700 social networking apps on Facebook, MySpace, and Bebo, and is on its way to processing $30 million worth of transactions this year. As the social networks and online games collide, and developers seek new ways to make money other than advertising, micropayments will continue to grow.
Like any payments business, even micro-transactions are all about scale. The bigger PlaySpan can get before the giants finally wake up and enter the market seriously, the better chance it has to becoming the PayPal of micropayments. Of course, PayPal, Facebook and MySpace all have their own plans to become the PayPal of micropayments. And plenty of other startups, from Zuora to Zong, are vying for the title as well.
I really wish paypal could expend their money receiving service to this part of the world (middle east). currently we can only send.
Its mainly because the fraud rate is so high that it causes their rates with mastercard and visa to go up. By supporting these countries, it ends up costing PP more than it gets.
Translation- Not gonna happen untill the fraud rates die down significantly.
sorry i mean expand..
Dan regarding fraud… i dont think fraud is higher here compared to Europe or US.
maybe in Africa or south/east Asia.
You are wrong. Its exponentially higher.
Im desperately awaiting paypal to enter this arena and utterly destroy the competition. Yes they have worse fees than most but unlike many of these startups, they have the trust factor going for them.
I am actually surprised PP hasnt entered yet- This is a potentially huge market and I think that having the ebay corporate behemoth behind PP is really slowing it down. PP can no longer “Act fast” as every change has to go through never-ending meetings, approvals and testing.
Want to know the extent of paypals “web2.0″ contributions? Be prepared to be unexcited: http://www.x.com/
They have an accumulated over the years DISTRUST factor “going to them” as well.
dan,
not sure why you think that those guys don’t have the trust factor going for themselves. look at their client base, and given that they’re a private label backend, to you think customers and clients are really being thwarted by the “trust” issue?
m
.. and the winner is? hmm.. let’s just wait.
Wonder how many people will get laid off at Spare Change. After PlaySpan bought PayByCash, heads rolled.
@Dan Blake
@Dan Blake
After you try http://www.x.com go try http://www.paypalsucks.com