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Article from SFGate.

“EBay Inc.’s purchase of mobile-payment startup Zong Inc. for $240 million is stepping up pressure on companies such as Google Inc. and American Express Co. to make their own acquisitions in the market.

Google has held exploratory discussions with mobile-payment startups, according to two people with knowledge of the meetings. Credit card companies, including American Express and Visa Inc., also are meeting with takeover candidates, though deals may not be imminent, people familiar with the talks said.

More consumers are looking to pay for things like movie tickets, apps and other items with their phones – rather than cards or cash. That’s pitting financial-service providers, which benefit from transactions, against technology companies like Google. Both sides aim to use mergers and acquisitions to shore up their positions, said Richard Crone, who runs Crone Consulting LLC, a firm focused on mobile banking and payments.

“There’re much more M&A and roll-ups to come in this space,” Crone said. “You will see the activity happening before the end of the year.”

The total value of mobile payments will reach $670 billion by 2015, up from $240 billion in 2011, according to Juniper Research. That includes transactions for digital and physical goods, money transfers and payments using near field communication – a wireless technology that lets users tap their phones against a reader to make a purchase.

Mainstream acceptance

Many companies are shopping for startups that help users charge purchases to their phone bills. Within a year, 40 percent of all U.S. mobile subscribers will put items other than ring tones on wireless bills, according to Chetan Sharma, an industry analyst in Issaquah, Wash. That’s up from 30 percent now.

Potential acquisition targets include Boku Inc.; Payfone Inc.; BilltoMobile, which is majority-owned by Danal Co.; and Amdocs Ltd.’s OpenMarket Inc., Sharma said.

Syniverse Technologies Inc., MindMatics AG’s Mopay unit, Bango and Vindicia Inc. could be candidates as well, according to Crone. Acquisition targets will sell for 10 to 20 times their trailing 12-month sales, he said. It’s unclear how that measures up against the Zong deal because eBay didn’t disclose the startup’s revenue when it announced the purchase last week.

Still, some startups may struggle to attract a deep-pocketed suitor or land that kind of premium. And large technology and finance companies may choose to develop the capabilities themselves.

‘Pressure to act’

Representatives from Google, American Express and Visa declined to comment on any potential deals, as did Bango, Boku, Payfone, Syniverse and Vindicia. OpenMarket didn’t respond to requests for comment.

Ingo Lippert, CEO of Palo Alto’s Mopay, said the Zong deal will likely give rise to more acquisitions, though his company is “solely focused” on operations.

“We’ve been forecasting consolidation within the mobile-payments space for some time,” Lippert said in an e-mail. “With Zong’s acquisition, companies testing out solutions within the mobile-payments market will now feel increased pressure to act.”

Investments in payment startups began picking up several months ago. In February, Visa agreed to spend about $190 million, plus performance incentives, to purchase PlaySpan Inc. The company handles purchases of virtual goods in online games and social networks. In April, American Express led a $19 million funding round in Payfone, a developer of a mobile-payment service.

EBay’s buying spree

Last year, eBay acquired Red Laser and Milo, two comparison-shopping applications that allow users to scan product barcodes and read reviews. With Zong, the company will get a bigger foothold for its PayPal payment service on phones, especially in developing countries.

Zong lets people pay for things by putting them on their mobile-phone bills. That’s attractive in emerging markets, where credit card adoption is low.

“The phone is ubiquitous, and credit cards are not,” Rodger Desai, CEO of Payfone, said.

U.S. carriers lets third-party services such as BilltoMobile operate on their networks. Verizon Wireless, for instance, allows charges of as much as $25 a month. BilltoMobile also declined to comment on whether it was a takeover target.

Carrier bills contained $3 billion worth of charges for virtual goods last year, and these charges are rising at 38 percent annually, Crone estimates. Those purchases can include ring tones, dating-site subscriptions and weapons for mobile video games.

Purchases of apps charged to wireless bills reached $5 billion last year and are growing at 68 percent a year, Crone said. Consumers in countries such as South Korea are increasingly charging physical goods to carrier bills as well.

“We are seeing very rapid growth,” said Jim Greenwell, CEO of BilltoMobile.”

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Article from GigaOm.

“Unless you really don’t give two hoots about the world of technology, it’s highly unlikely you would have missed the big brouhaha between San Francisco-based startup Square and VeriFone, a payment processing services provider. VeriFone accused Jack Dorsey’s product of not being secure and being easily hackable. Dorsey denied.

This week’s dust-up makes me wonder if VeriFone quite understands its own business. To me, they are a company that provides payment-processing services to big retail outlets, fast food chains and other large transaction volume establishments. That’s what really makes them a good company. Square isn’t going after those customers. It’s going after people who would rather not be VeriFone’s customers. Earlier this year, in a conversation, Square COO Keith Rabois told me that

“Most of our competitors (including the likes of VeriFone and Intuit) focused on 7 million merchants who have the ability to get merchant accounts from say Visa or MasterCard. We are going after 26 million folks who are not merchants in a classic sense.”

When I look at Square, I see a company that’s all about helping payment processing for a different class of customers: you, me and the guy selling apricots at Sunday’s Farmer’s Market. Square is about transactions that are more peer-to-peer in nature. These kinds of transactions are mere crumbs on trail to a much bigger economic trend.

The New Peer-to-Peer Economy

For the lack of a better term, let’s call this trend a peer-to-peer economy. Here, transactions happen between individuals or a group of individuals and not between corporations and individuals.

Just look at AirBnB, a perfect example of a peer-to-peer economy company. It offers a platform for folks to rent rooms (or villas) from other folks. The company takes a piece of the action for making the connection between the buyer and seller — who more often than not, are individuals. Typically, this would be an economic transaction between a traveller and an hotelier. Several other iterations of this basic idea have emerged; for instance, OneFineStay is doing peer-to-peer vacation rentals. RelayRides is another startup that allows you to share cars.

One of the companies I am absolutely fascinated by is New York-based Kickstarter, which I think is less a company and more a socio-economic movement.

KickStarter is a simple site that marries patronage and commerce. Artists come and list their projects and get in touch with friends and supporters, who pledge their money. If the money needed by a project is pledged, the artists get to work. If not, it’s back to the drawing board for them.

In less than two years, Kickstarter has come out of nowhere and is now helping projects raise as much a million dollars a week — from individuals like you and me. It helped raise a lot of money for open-source Facebook rival Diaspora and the iPod watchbands TikTok and LunaTik.

The Network Is the Dollar

This peer-to-peer economy is a throwback to an older way of life, where folks used to barter for goods. It was a different kind of economic transaction, but still it was an economic transaction.

The onset of industrialization brought in mass production and mass consumption into our societies. The Internet and by extension, mobile is going to help change that.

One of the things the Internet enables is our ability to connect with each other very quickly. These connections can go beyond sharing of tweets, photos and links.

The network is a springboard for services and platforms that enable one-on-one (or one-to-many) interactions. The easy to use tools — web and mobile — make it easier for like-minded people to congregate and engage in commerce.

I wouldn’t be surprised if we see more companies try to tap into the shift to the peer-to-peer economy. The winners will be those with big platforms and the likes of Square who provide enablement services. Perhaps next time, VeriFone needs to remember that.”

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Here is some upbeat news from BusinessWeek.

“After months of market turmoil, are investors finally ready for a slew of brand-new stocks?

The owners of some private companies think so. In early August, Hyatt Hotels & Resorts announced plans to raise about $1 billion through an initial public offering. There’s speculation that buyout giant Kohlberg Kravis Roberts is preparing retail chain Dollar General (DG) for a stock debut. Last month 12 companies filed with regulators to go public—the most since investment bank Lehman Brothers failed back in September 2008.

The conditions for IPOs have improved dramatically since the desolation of last winter. Stocks have rallied from their lows. And new companies are outperforming blue chips: The FTSE Renaissance Capital IPO Composite Index, which tracks the returns of IPOs, is up roughly 33% this year, vs. 7% for the Dow Jones industrial average. “Nobody’s pushing any dogs here,” says Gregg Slager of Ernst & Young’s private equity consulting group.

To be sure, the glory days aren’t back. The pipeline, though improving, isn’t bursting with new listings: At the peak of the boom, dozens of companies filed to go public each month. And obviously the businesses can’t raise $18 billion at a pop, as credit processor Visa (V) did with its offering in 2007. While the largest IPO of this year, Starwood Property Trust, raised the size of its offering from $500 million, it still raked in just $800 million in early August.

But the increased IPO activity may signal that the recession is easing—or at least that investors think the economy is on the mend. “There’s confidence in the market,” says Harris Smith, managing partner of private equity for Grant Thornton, a consulting firm. And “there’s pent-up demand for new, quality stocks.” After the dot-com bust, new stock offerings picked up just as the economy started to turn.

BUYOUTS RULE

Private equity owners are the most active participants in the IPO markets nowadays. Of the 16 companies that have gone public this year, 8 are backed by buyout firms. And more IPOs are in the works. “There are a couple of companies that are definitely candidates [for going public],” Tony James, chief operations officer of Blackstone (BX), said in a recent earnings call. “If the markets hold up and continue the trend, you will see some IPOs from our portfolio.””

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