Mobile Payments Startup Raises $8 MillionMobile Payments Startup Raises $8 Million

Bling Nation is trying to get consumers to use their cell phones as digital wallets, and the startup has raised $8 million in funding from Lightspeed Venture Partners and Meck and Camp Ventures.

The company markets its technology to banks and tries to get them to issue its secure stickers with RFID tags that are tied to a customer's account. The customers attach the stickers to any handset, which can then be swiped near special terminals to purchase physical goods from stores. The purchaser immediately receives an SMS message when the transaction goes through that can serve as a receipt.

Like a debit card, Bling Nation said the stickers have to be activated to be used, and can be immediately disabled if the user loses the phone. The merchandiser has to purchase a special sales terminal to use the system, and the company said this equipment costs about $150. Bling Nation said its system can be advantageous for merchants because it makes it more convenient for customers to buy products, and the company takes a far lower transaction fee than major credit card companies like American Express, MasterCard, or Visa.

"Bling Nation is enabling innovative mobile payments solutions that are much more convenient and significantly safer than paying with a credit card or cash," said Eric O'Brien, managing director at Lightspeed Venture Partners, in a statement. "Today, the payments industry is an inefficient $60 billion industry that closely resembles the telecom industry a decade ago -- what is being charged for a payment bears no relationship with the actual cost of processing the payment."

In countries like Japan, consumers are used to paying for goods with their cell phones, but the U.S. market currently lacks the infrastructure, awareness, and access for mobile payments on a widespread level. The company said it is taking a local, community-based approach to deployment, and it said the State Bank in La Junta, Colo., has seen a quarter of its customers sign up for the mobile payment program in two months.

The company is entering a highly competitive field filled with deep-pocketed rivals though. Visa and MasterCard have released multiple mobile banking and payment programs, and both have strong brand names and relationships with merchandisers around the world. Additionally, Nokia has invested in the space, although its efforts appear to be focused on emerging markets where it's hard to access banks or credit.

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