Monday, February 4, 2008

New funds, partnership aid growth at Cyphermint

By Christopher Calnan

Cyphermint Inc., a Marlborough-based maker of electronic payment products, is gearing up for a major growth spurt this year after shifting its market focus from Internet payments to kiosk and mobile payments that will be fueled by an expanded partnership with package delivery company DHL International Ltd.

CEO Joseph Barboza said the company recently is about to close on $5 million of a $12 million Series A round of financing that he plans to use to hire 18 more workers in Marlborough during the next two years as Cyphermint expands to South America and China. The additional employees would increase the company's head count from 28 to 46, he said.

This year, Barboza projects Cyphermint will reach profitability and generate $10 million to $15 million in revenue. Next year, he's projecting more than $30 million in revenue fueled by wider adoption of mobile-payment technology.

"The cell phone market has taken off, mobile has taken off -- and we're ready," Barboza said.

In 2004, Cyphermint shifted its focus from the online payment market after PayPal -- an eBay Inc. company -- established a foothold in that business, he said.

Cyphermint has plenty of company in the mobile payment industry, however, even though that space is still in its infancy. Several companies such as Google Checkout, The Western Union Co. and PayPal are entering the market, said Charul Vyas, an analyst for the emerging technology service of the Tower Group Inc., a Needham research firm.

Barboza said he considers California-based OboPay Inc. to be Cyphermint's chief competitor.

Local competitors include Portsmouth, N.H.-based NextChoice Inc., which developed such technology for restaurants. Watertown-based MobileLime develops mobile marketing and payment technology for retailers.

The adoption of mobile banking is projected to grow faster than online banking because more consumers are expected to be living in cell-phone-only households during the next five years, according to Celent LLC, a Boston-based financial services research firm.

Cyphermint, started in the mid-1990s in St. Petersburg, Russia, opened a U.S. headquarters in Marlborough in 2001. The company has operated for nearly a decade with a $25 million seed investment by its founders, Barboza said.

The Series A investors are New York-based private equity firms, he said.

In addition to mobile payments, Cyphermint is expanding its business with self-service kiosks. In April, it's scheduled to start processing transactions completed at DHL International kiosks in 6,000 stores operated by the Walgreen Co.

The deal is in addition to Cyphermint's arrangement with DHL at 800 OfficeMax Inc. stores.

Cyphermint processes 30,000 to 40,000 DHL transactions daily, generating 35 cents from each shipment it processes, Barboza said.