Monday, July 30, 2007

Danal gets investment

Sth Korean Payments Company Danal Gets $6 Million Investment, Enters US

By James Quintana Pearce - Thu 21 Jun 2007 01:11 AM PST

South Korean company Danal has convinced investment firm Morgenthaler Ventures to invest $6 million in its U.S. subsidiary, which will mark the entry of the mobile payments company into the US. Morgenthaler holds a minority stake, and Danal has invested $3.5 million in the US subsidiary reports the Wall Street Journal. Danal’s service lets people charge digital items and tangible goods to their mobile phone bills using an authentication code on their PC—they receive the code as an SMS when they want to buy something. It’s targeted at young people without credit cards and is quite a simple service (no special mobile software needed)—but the mobile payments market is getting pretty crowded so it will have its work cut out for it. “One hurdle may be lining up enough online merchants to participate, says Aaron McPherson, a research director at Financial Insights, a Framingham, Mass., research firm that is part of IDC. US merchants will have to give up a small percentage of every online sale to let their customers use Danal’s service. (That fee will be split between Danal and the cellphone carriers.) The fee for credit cards is about 3 percent, but the fee for Danal-brokered transactions will likely be higher, though less than 10 percent. So “cost-wise, it doesn’t really work for the merchant,” says Mr. McPherson. Danal’s Mr. Kim points out that around 16,000 merchants are already working with Danal in Korea.”

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