Hoping to make a splash, Secure Wireless Transfers Corporation launched its KushCash mobile payment system at the Huntington Beach, California, U.S. Open of Surfing on Monday, becoming the official payment system for the Association of Surfing Professionals International (ASP).

Backed by $1.2 million in friends-and-family seed money, and currently closing a $12-million private investment, Orange County-based KushCash joins a lively pack of mobile pay services, including PayPal Mobile, Obopay, MobileLime, Get Scoot, and TextPayMe (see PayPal’s Wireless Play, Obopay Gets $10M for M-Wallet).

All of these services use technology to turn a mobile phone into an “m-wallet,” or mobile wallet, allowing people to replace wallets with digital cash. For the bikini and Billabong set, this technology frees up limited pocket space.


Since Obopay's funding, it has released a test version of software available to download on Cingular phones. KushCash is also available to download on Cingular phones. While Obopay charges a dime to send and receive funds, KushCash allows funds to be sent for free and charges $0.50 to receive funds. Both Obopay and KushCash have branded plastic debit cards that can be used with funds stored in a user’s account.


eBay-owned PayPal in April released PayPal Mobile, allowing people with mobile phones to purchase items that feature a “text to buy” logo.


Meanwhile, Massachusetts-based startup MobileLime is focusing on teaming with retail businesses to offer customized, local mobile coupons through its mobile pay service, enticing customers into the store, where purchases can be made with the technology.


Mobile Turf Battles

KushCash Interim CEO Peter Hewitt and CTO Jeppe Dorff know that competition in the mobile pay market is fierce and that there are challenges in setting the company apart from others offering similar mobile wallet technology.


“What we’re doing is tailoring our service, approach, and brand to the youth market, the 18- to 34-year-olds, the sweet spot in text messaging and one of the hottest areas in the mobile space,” Mr. Hewitt said.

Whether or not KushCash can out-peacock competing technologies is still unknown, but the company’s branding efforts, combined with its connection to the surfing crowd of the ASP and its own surfer-style design within its website, might help it attract this youth market.


The launch event Monday introduced approximately 350,000 attendees of the U.S. Open of Surfing to the product. In addition to promotional kiosks, the sporting event used the KushCash technology to pay its winning athletes.


“KushCash is a totally new way for us to pay prize money to our champion surfers. We think SWT has enormous potential and will integrate their solutions with a lot of our events in the future,” ASP CEO Brodie Carr said in a statement.


Will They Go for It?

U.S. consumers and wireless operators are not the first to delve into “m-wallet” technology. Japanese wireless operators NTT DoCoMo and others run successful services that use the phone for a credit card, ATM card, apartment key, and train ticket. The U.S. market is less phone-savvy and is still playing catch-up with Japan.


The success of any of these technologies depends on consumers finding them irreplaceable. Mr. Hewitt is often asked, Why use KushCash instead of conventional payments? He has no shortage of answers to explain where the technology could come in handy.


“I’m in a meeting, my daughter is in college and she calls me up on her cell phone and says, ‘I need $50 to buy textbooks for my next class.’ I say, ‘That’s easy, I’ll just Kush you $50,’” Mr. Hewitt said.

There are some who think the technology may never take off or offer enough value that people will want to use it over conventional payments. “I think what needs to happen is that there needs to be a compelling reason for why I want this,” said Julie Ask, a wireless analyst at JupiterResearch. “What are the scenarios that I need to be traveling so lightly that I don’t need to take my wallet with me? It’s got to be more convenient than paying with cash, coins, or credit cards today.”


Other challenges for the smaller startups include gaining the trust of a large consumer base. Ms. Ask points to PayPal’s move into the mobile commerce space as making sense because it is a bank with an already large customer base. Meanwhile, she thinks MobileLime is moving in a smart business direction by giving shoppers loyalty points and using the technology with a marketing angle that benefits both the customer and retailer.


But for the other startups it will be expensive to acquire customers, she said. And those companies have to earn the customers’ trust, as they require users to submit personal information including credit card numbers in order to work. While many customers already trust such big companies as PayPal, it will be difficult for a smaller company to gain the same level of trust.

Contact the writer: ADeMonte@RedHerring.com