Jun. 7, 2011
Denver-based eWise Systems Inc., provider of the switch that runs the new Secure Vault Payments system for online purchases over the automated clearing house network, announced on Tuesday that it had raised $14 million in venture-capital financing. The new financing is significant because it more than doubles all the money that had been invested in the company, now a total of $26.1 million, since its founding in 2000.
Chief executive Alex Grinberg sees the financing round as a vote of confidence by investors in eWise’s plans for online and mobile commerce. “Obviously we’re delighted with the outcome and results,” Grinberg tells Digital Transactions News. The company plans to use the funds to grow SVP in the U.S. and a similar online-payments service in the United Kingdom dubbed eWise payo. The financing also will help eWise launch the mobile-payments version of SVP that it announced in April.
“Clearly, as all companies are, we’re interested in growth,” says Grinberg. “We think what we’re doing is hugely disruptive.”
SVP, which eWise developed with Herndon, Va.-based NACHA, governing body of the ACH, was live at 38 financial institutions at the time of NACHA’s annual conference in April. Grinberg wouldn’t give numbers about how many new banks and credit unions are in SVP’s pipeline. “The short answer is lots,” he says. “We’ll have more to say about that shortly.”
EWise currently has 45 employees, but Grinberg expects the head count to hit 60 by year’s end. The company, which recently moved its headquarters to the U.S. from Australia, has employees in those two countries as well as the U.K. and China.
NACHA and eWise see Secure Vault Payments making the ACH a top-of-mind payment option for consumers in e-commerce, where credit cards have dominated for the 15-plus years since the Internet went commercial and where debit cards are now gaining traction. With SVP, the consumer authenticates herself with her online-banking credentials, and merchants never see the purchaser’s sensitive account information.
While it’s still too early in the game to make calls on winners and losers, the mobile version of SVP could make the ACH a strong contender in the roiling m-commerce payment market. EWise and Minneapolis-based U.S. Bancorp, SVP’s largest deployer, demonstrated the planned service at a recent conference in San Francisco, a service eWise expects to pilot later this year. The service uses so-called Quick Response (QR) bar codes that contain data including a merchant identifier, transaction identifier, and sale amount. The consumer passes her smart phone with its mobile-banking application in front of the point-of-sale device displaying the half-inch-square bar code in order to authorize an ACH payment from her checking account. The system also can be adapted for mobile bill payments.
In the U.K., eWise payo is not as far along as its American cousin, but Grinberg expects it to be live in the fourth quarter. He wouldn’t name any participants yet, but says, “We have had absolutely outstanding support” from financial institutions and merchants.
Wellington Partners Venture Capital led eWise’s funding round with participation by previous investors that included Balderton Capital, TTV Capital, and Patagorang. Wellington is based in Europe, with U.S. operations headquartered in Palo Alto, Calif. Wellington partner Alexandre Gonthier has joined eWise’s board of directors.
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