Cashless Payment Firm Smart System Technologies Rings Up $6M in Series A
By Jonathan Matsey 4/7/2004, From VentureWire
Smart System Technologies Inc., or SST, a provider of cashless payment systems and market analytics, said that it has raised $6 million in Series A financing.
Draper Fisher Jurvetson Gotham Ventures led the round, joined by the Grosvenor Funds and Apex Venture Partners. The funding will be used to bring its PowerPay product to the market, said Mark Johnson, president and chief executive of SST.
PowerPay is a cashless payment card system based on radio frequency identification, or RFID, technology. RFID is currently used primarily in automatic toll systems to debit driver's transponders automatically each time a car passes through a tollbooth. Similarly, PowerPay allows users to link their PowerPay card to any credit or debit account, which is automatically charged when the card is waved in front of a scanning device at the point of sale.
While this might raise concerns about security, Mr. Johnson said that the card has several advantages over credit and debit cards. Such cards contain magnetic strips that contain a substantial amount of financial information, he said, unlike SST. "We're a hosted solution," Mr. Johnson said, meaning that the information resides on databases, not on the card itself. Users who are concerned about issues of privacy or theft can set the system to require a signature or positive identification before making a sale.
Mr. Johnson expects to see RFID readers proliferate in retail locations around the country, as more card providers begin to use this technology. "As card companies put their products into the market, those readers will become typical hardware peripherals," he said. Currently, he said the only other companies performing a similar service to SST's are gift card companies.
Besides providing cashless payment services, SST also offers what Mr. Johnson referred to as loyalty programs. These programs essentially function as electronic coupons and give users discounts for visiting particular merchants at specified times. For the merchants, SST provides anonymous demographic data about clients. PowerPay is currently in place in the stadiums of the Seattle Seahawks and Philadelphia Eagles; in those markets the company has signed up several thousand users, Mr. Johnson said. In the next several weeks, the company plans to announce deployements in additional sports facilities as well as select grocery stores, movie theaters, and convenience stores.
New York-based SST, founded in May 2003, has nine employees.