What recession? Startup Bling Nation just raised $20 million in Series B funding from Balderton Capital for a new cell phone payment system. This brings the startup’s total funding to $33 million since its launch in 2007.
Bling Nation’s ambitions are to establish a revolutionary and comprehensive payments system for physical goods. Here’s how it works. The company partners with local banks in super small communities in the U.S. (where the prominent bank isn’t Citibank or Bank of America). Banks will then offer the consumers who use their services a Bling Nation and “Bank” branded chip that can be stuck onto any cell phone device. The chip will allow any user to make a payment directly out of their checking account similar to a debit payment.
Bling Nation also partners with all of the local merchants in given town, to give them special “Bling Nation” credit card machines that will scan the chips. The payment device will calculate the number of times a payee has made a transaction and as an added bonus, will automatically award the user with coupons, points or discounts, which the merchant determines. The device will read the chip and deduct the money for a purchase out of the payee’s bank account. Bling Nation even allows merchants to implement a security feature, in which upon purchase, the customer will have to enter a PIN code for larger transactions.
Currently, Bling Nation is being used in two communities in Colorado, including La Junta and Woodland Park, which are both small towns outside of Colorado Springs. Bling’s CEO Wences Casares tells me that the device will be implemented soon in towns in the Northwest and Southeast U.S. And Bling is in talks with universities and military bases to implement its system.
Bling monetizes the payment network by taking a cut of each transaction, which Casares says is very small. The reason Bling’s device is attractive to merchants, says Casares, is because they can avoid costly transaction fees associated with credit card purchases. Even with the debit fees and the Bling’s cut, merchants end up paying 50 percent less in transaction fees than if the purchase was through a credit card system.
vamo nene!!!
Terrible, terrible name for a company attempting to be an enterprise-class service.
I so solidly agree with you Brock… They sound like a dodgy ringtone subscription site!
and brock sounds like the dude barbi met on spring break.
Check out and see who’s behind Bling and you’ll see they could be called fatdirtybitch.org and things would have still worked.
I see you’re a successful entrepreneur… where did you see a company going public because of its name, bobo?
I think they have bigger barriers than the name such as the distribution of chips to get enough penetration, the fact that people changes cell phones quicker than ever. And I think that the only fact of being cheaper than credit cards is not a competitive advantage. But my question is, why some Argentineans are so primitive that cannot accept other people opinion, and why are so aggressive in replying those opinions. For example: “callate marmota” means “shut up stupid” and “bobo” at the end of the comment means “silly”. Of course Wenceslao has enough guts and brains to make a success out of this. Seriously, do you think he needs such a defense?
Interesting that no mention is made, of sync’ing the chip with SMS-commerce. As the article reads, its a terrestrial based, face-to-face transaction model.
There seems to be an opportunity, to give the chip users more purchasing freedom than just there small town. If they go to the big city, or online, a simple SMS should be configured as a purchasing handshake.
What about it Bling? Online registers need to ring.
there’s not even a mention of where the cell-phone fits into the equation. how is this mobile? because you glue the chip to the back of your phone?
or you could administer birth control through the adhesive material and tell women to stick it on their boobs. when they want to pay for something they just lean over the payment machine.
Glad to see that we’re finally starting to catch up to some Asian countries that have had this ability for more than a year.
ldqw
How does this scale?
I’ve had an interest in their business model since I first heard about it, but it still has issues. Revolution Money also has raised large amounts of money to go after the same market, but I haven’t heard anything from them in a while. This is a tough nut to crack, so good luck to them.
Quite complex system they have implemented. To grow in terms of user-base, one needs simpler system as I see from the customer point of view.
Why is this easier than credit card transactions? The answer is it isn’t, just cheaper. For now…
What happens to these guys if the existing card processors math their processing fees?
*match*
this is not intended for US market really…
The difficulty with a system like this is in achieving critical mass. BlingNation needs to convince two different audiences that this is a good idea: consumers AND retailers. Only when they have convince BOTH does this work. And that is why it will be difficult for this good (but not great) idea to succeed.
Lower transaction fee’s are fine. But if I have the choice between paying a lower transaction fee on a device nobody uses. Or a higher transaction fee for regular credit cards. I will take the regular credit card fee. That way my customers could actually pay for the products in my store as a merchant.
Something that improves profit is more welcome than something that reduces an already very small margin.
Loyalty / Discounts is not enough. Credit cards have those. The technology being new also isn’t enough. The challenge is to find a compelling reason why people should give up credit cards.
Great achievement by a super successful entrepreneur Wences Casares, congrats!
Wow! I think this will be huge. When everyone has smartphones.
You can put a sticker with an embedded transponder on any kind of phone.
FirstData and Vivotech have been doing this for vendors like SmoothieKing (sp?) for a couple years.
I think Bling is late to the party… Credit Cards have been around for a few years now…
I’ve thought a lot about this market, and it’s definitely ripe for innovation. However,
Blingnation? – Sweet name – do you sell “iced out grills” to rappers? I suppose a name isn’t everything, but if it’s a B2B play, they could’ve stuck to something more technically/product oriented.
A “branded” bank chip linked to my checking account that I can stick on the back of my $400 iPhone? Only ask for a password for “larger” transactions? I could be in the minority, but that doesn’t exactly sound like a “have to have” for me, as a consumer. What if I lose my phone? I’m sure you can deactivate it, but that’s quite a risk to consumers – when I’m gonna have a pretty hard time (for a critical few hours) calling them up to cancel my account without my phone.
Are they banking on merchants forcing their customers into this just so they can save a few % on fees? Explain to me, the consumer, why I “need” this product. Is this comment section their customer development?
$28 Million? I hope every resident in those 2 towns they’ve signed up in Colorado are using this religiously, and are ready to shout to every one of their friends about how awesome it is.
Somebody is going to figure this out, (@jack might) and when they do, it will be revolutionary. I’m just not 100% sold on this system. Hopefully, for their investors, they can prove me wrong.
Well-here’s the thing- this is a seemingly simplistic model to get market entry and penetration-so small towns and chips on phones works. It also taps into the merchant desire to get around larger banks, card issuers and their interchange fees. Not bad. Issue- what happens when you get to larger towns/cities and compete with the traditional POS business? They will need to look at advanced card-not-present solutions as well as provide a compelling story as to why merchants should pay them a commisson on top of traditional interchange. If they do want to avoid Master, VISA, Citi, etc, they will need to set up as a processor at the backend.
Correction – $20 million, total $33M. Still a lot of dough.
This is a big vision and Bling has the team to pull it off. Wences and Micky are stars who have done it before. This is one to keep an eye on.
My congratulations to the entire team.
Go W & M!
Felicidades y abrazo
/Osk
It won’t last for them. Lots of people don’t want anything stuck to their phones. Someone will create an application that does this for any bank account holder through wimax networks set up in each city and state that will feed into each and every merchant that wants to set up a recieve funds account through them. Technology is changing fast and a little chip being stuck onto a phone wont stick with the everyday advances. Good for them for raising 30 + million dollars though. They will need it once they find out that someone has one upped their idea.
+1
The creation of a new money supply is as daunting as the creation of a new government. These systems are absolutely valuable, and ever so difficult to enable. Critical mass is obviously the big challenge. How long is it gonna take, how long can it take?
Individuals need to own their own money supply. This reality extends from individuals owning their own government. This is an extension of individuals owning their own life, as a Right that precedes any right given to man by man. America needs to be reconstituted as a nation that is owned by owners, where all citizens own their life and the currency that extends from it.
All commercial activity is a service that extends from the opportunity to provide that service to a marketplace owned by the individual constituents that originate the existence of every marketplace in the Universe.
Seriously… its that big. Ownership of your identity is the administrative act that manifests your life as a manageable commodity on this planet. Until you own it, you are a kind of slave to the system. Freedom is not freedom until you own it within any socio-economic system.
Japan has only had this type of technology forever. I mean, you can pay for taxis with cell phones there. Cell phones are the everyday equivalent to credit cards for many purchases.
This is definitely true – which makes it all the stranger that this is being hailed as some huge innovation or technical feat. The real feat will be getting retailers on-board, as other people have noted.
I suspect an established US phone vendor is just going to license the tech. from a Japanese company and use their clout to build partnerships with retailers. You need to draw a lot of water, or be very, very, very, very clever, to pull off a major push like this.
I don’t think you understand how much of an island Japan truly is. Japan doesn’t have millions of banks that make acquiring merchant transactions very difficult.
This is not a technical play specifically as contactless cards are already used here in the US. This is a business play. US telco companies haven’t come to an agreement with credit card companies yet
True but not entirely-the rest of Asia is leaping ahead-not just Japan(frankly Asia is largely de-linked from Japan). For mobile payments, think Phillipines, Singapore, Malaysia, India, Australia. The challenge for everyone is the replacement of traditional POS with CNP and immediate settlement at checkout. I do not see that replace Master/VISA interchange though.
No thanks I’ll stick with my credit card.
If one of these machines utilized its connection to the Internet properly we could very well see a complete shift in the way people spend their money. This company, however, will not.
This gadget might help small off-line stores, as to keep the highstreet from being a ghost town more alternative methods of payment/payment processing the better.