BitPass, a new micropayments/aggregation payments company, has just launched in beta. It works on the principle of stored value in a card and then spending it (pre-paid card)…a model that has been tried in many iterations before this.
Most of these ventures have failed…ALL of these ventures have failed. So when an evangelist and Valley fixture like Guy Kawasaki backs it, you have to wonder. Is he betting his chips on the wrong horse, or is there more to it than meets the eye? (Well, you will have to wait until tommorow to find out…watch out for an interview with him).
The company’s background is interesting, if only for the fact that it is a very Valley startup, out of Stanford. The co-founder and CEO Kurt Huang was a PhD candidate in Biomedical Informatics, before he started this with his roommate, the co-founder and CTO Gyuchang Jun. Jun was also completing his PhD in Material Science and Engineering, doing research on quantum-level simulations of new materials.
COO Matthew Graves is a Wells Fargo veteran, with about 25 years of payment industry experience, and Glenbrook Partners, who are consultants in the financial services and payment industry, are advisors to the company.
On the operational side, the model is a bit like PayPal (PayPal is one of the options to buy the credit), though on a smaller scale. Users can have stored values as low as $3, and can spend as low as a cent. Of course, since it works on aggregation, the transaction costs are aggregated and hence minimized. It is a low risk solution for the content providers, as well as users, according to Huang. For content providers, it can be implemented in about 30 minutes, and has very little or no upfront enabling costs.
And his company is going for the “small guy”, people like the seminal cartoonist Scott McCloud, who has signed on to be among the first to offer the service. McCloud is very enthused about the company: “Their founders contacted me in November of 2002 and showed me what they were working on and I’ve been consulting ever since,” he said in an interview with CBR News. I’d talked to maybe a dozen companies and individuals over the years who thought they could pull off micropayments, but one look at what BitPass had planned and I was convinced that if anybody could do it, they could.”
The adoption hurdle is from both ends of the funnel: the content providers, of which they need a critical mass before users become interested, and then, of course, users to buy these services/content. But then, that is true of any micropayments/aggregation schemes.
Since the company is in beta stage, it is unwilling to disclose many of the details. Among those, details like venture funding…besides Garage, other individual investors and institutional investors are coming on board, according to the company. It hopes to formally launch in about 60 days.