Payment Companies that Ran Out of Business Despite having Funds at their Disposal

Although there always have been discussions about new startups, there is rarely talk about what happened to the ones that fell by the wayside. This is not an exhaustive list, but we want to discuss why some payment companies went out of business despite still receiving money from investors.

The reasons that many of the payment companies mentioned here went out of business have not been disclosed. Those that have been revealed vary in nature, but a common one is nonacceptance on a wider scale. A noneffective business model can be blamed in such scenarios. Another reason that can be deduced is that the companies mentioned here provided very specific services for niche markets. This could have affected the mass adoption of their services.


The CEO of the company, a New York-based Bitcoin exchange, was arrested in January, charged with money laundering for associating with a Silk Road user. Silk Road is the deep-web black market. The CEO, Charlie Shrem, was accused of selling over $1 million in bitcoins to Silk Road users. The company became nonoperational in January. It had last received funding, $3 million, in 2013.

Bling Nation

The Palo Alto, Calif.-based mobile payments and loyalty company suffered a major setback when it tried making changes to its business model in 2011. A big misstep occurred when the company launched a loyalty program, FanConnect, that didn’t appeal to most of its merchant base. The company had lost most of its merchants by the time it made the loyalty program optional. Another mistake the company made was lowering the fees that banks earned from retailers on card purchases. The company closed its operations in May 2011. It had last received funding, to the tune of $28 million, in 2009.


The Seattle-based firm offered a mobile checkout platform that enabled users to make single-click mobile credit-card payments. It offered a mobile wallet service that enabled users to make payments to Buck-associated merchants. The company had last received funding, $13.2 million, in 2011.


The Israeli firm provided an online-payment-processing service called OneTouch Online Purchasing. It also offered consumers fast and secure payment options for digital content. The company’s services enabled payments without requiring credit/debit cards or even PayPal. EBiz.mobility had last received funding, $1.1 million, in 2009.


The U.S.-based firm provided a mobile publishing and e-commerce platform that enabled monetization by connecting to popular payment gateways, such as PayPal and Authorize.Net. The company had last received funding, $115,000, in 2010.


The Buenos Aires-based firm offered a digital payment platform for digital content, virtual goods and online games. It offered multiple payment options via banking (debit/credit cards, ATMs, etc.) and nonbanking (prepaid cards, gift cards, etc.) systems and even SMS. The company had last received funding, $250,000, in 2010.

Microfinance International

The Washington, D.C.-based firm provided a mix of transactional services, such as money transfer and check cashing, along with value-added products, such as microlending, business loans and mortgages. It also offered ARIAS, which enabled remittance for financial institutions. The company had last received funding, $22 million, in 2010.

MPower Mobile

The Texas-based firm developed mobile payment applications that enabled consumers and merchants to buy, sell and transfer money via text-messaging. The company had last received funding, $5 million, in 2009.


The Sao Paulo-based firm offered a virtual payment system that turned the user’s information into actual money. PagoPago provided user information to companies in the form of an advertising platform. In exchange users would receive money for sharing information. The company had last received funding, $800,000, in 2011.


The Idaho-based company developed apps for peer-to-peer mobile payment and identification to facilitate financial transactions. The apps enabled users to instantly make and receive PayPal payments. The company used a patent-pending peer-recognition technology for authentication. Additionally the company provided NFC stickers to enable contactless payments. It had last received funding, $4 million, in 2011. Currently, the apps aren’t available in app stores.


The Moscow-based firm was a B2B2C trading platform on the Russian Internet. The online platform enabled buyers to purchase goods, order delivery and make payments at online stores and to offline sellers. The company had last received funding from the Parta Group in 2009. The funding amount was undisclosed.

The company offered an e-commerce platform that enabled anyone to sell physical and digital items. It even enabled other websites and applications to offer the same e-commerce experience to users as they have on their own website, thorough Tinypay’s Marketplace feature and APIs. The company had last received funding, $1 million, in 2011 and had shifted its base from the Netherlands to San Francisco.


The Atlanta-based firm originally provided a service that facilitated payments via Twitter. The company was acquired in 2010 for $100,000 by investors including Acculynk CEO Ashish Bahl and Morgan Keenan investment banker Keith Meyers. They had additionally put in $1 million but decided to take the company forward as nonprofit fund-raising tool.


The Los Angeles-based firm provided Digital Postal Mail, a secure paperless postal system that enabled businesses to deliver transactional mails electronically to their consumers’ digital mailboxes. The digital-mail-delivery service was PCI-DSS compliant and simplified the payment process for customers by supplementing existing payment options. On April 7, 2014, the company announced via e-mail that it was shutting down. The company struggled for widespread acceptance and to acquire a prominent customer base. It even tried running a special campaign that offered a $1 million prize draw. The company had last received, funding, $21.2 million, in 2012.

Note: Considering the case of Twitpay, we can see that it is a case of acqua-hire, which basically implies acquiring and hiring the resources. Twitpay shows that its acquisition led to the use of its resources for purposes that differed from what its business model used to be.

There are several prominent reasons for the closure of such businesses, including the following:

  • A series of fraud attacks on consumers.
  • A lack of merchant acceptance, which further affects consumer adoption.
  • Payment methods are complex in nature.
  • A fear of sharing personal information with payment companies.

Difficulty in making payments to people using other payment systems.