Danal's US Subsidiary Closes $9.5 MM Funding for Mobile Payments

Danal Co., a public entity in South Korea with 2006 revenues of around $75 million, pioneered the mobile payment industry in South Korea in 2000. Danal allows consumers to purchase goods and services online by charging their regular mobile phone bills. This service has seen wide adoption in Asia. In 2006, South Koreans alone charged more than $1 billion worth of transactions - representing 70% of all digital content purchased online - to their mobile phone bills. Danal Co., the global market leader, currently holds close to 50% market share in South Korea.

Danal Co. is the only company to have integrated 14 mobile carriers across CDMA, GSM, and TDMA-based platforms in South Korea, Taiwan, and China and is the global market leader in this space.

"We are grateful for the strong endorsement received from Morgenthaler," said Paul Kim, founding CEO of Danal, Inc., the U.S. subsidiary based in San Jose, CA. "It is extremely rare for a U.S. venture-capital firm to invest in the U.S. subsidiary of a publicly-listed Asian company. This says a lot about our business, management, and what we've accomplished in the U.S. already."

"Danal has a significant lead and is in the best position to dominate the US market," said Ken Gullicksen, a partner at Morgenthaler Ventures. "Danal created this category. It is the market leader in South Korea, Taiwan and China. And, it is the only mobile payment provider to have commercialized this service on a large enough scale to guarantee a high quality of service and security to customers."

Forrester Research estimates that the U.S. eCommerce market will grow to well over $400 billion by 2011. If mobile payments make up only 8% of the U.S. eCommerce market in 2012 (a level the South Korean market reached in the fifth year of service), then mobile payment transaction volumes could reach $40 billion by that year.

Danal will use the $9.5 million in venture financing to add to its team, commercialize its mobile payment service in the U.S. and strengthen its relationships with mobile carriers and merchants. In Korea, more than 16,000 online merchants already offer mobile payment services to their customers.

How It Works:

Danal's service allows users to charge their purchases at any participating online website to their mobile phone bills without ever having to sign up for an account or even owning a credit card. Customers simply shop online as they normally would. When making a purchase, instead of inputting confidential credit card and other information, they input their mobile phone number, voicemail password, and a separate authentication code received instantly via SMS (text message on their mobile phone). The two-factor authentication system makes Danal's solution extremely robust against phishing and fraud. Most transactions only take between 10 to 20 seconds from inception to completion, and customers pay for the charges when they pay for their regular mobile phone bill. Danal's flexible service enables customers to purchase both physical goods and services, as well as digital content, such as online games, avatars, virtual items, music, video, and more. Typical purchases range from $1 to $30.