I’m thrilled to announce that Zong has reached an agreement to be acquired by eBay (PayPal) — full announcement, and PayPal CEO Scott Thompson’s thoughts on the PayPal Blog.

Getting to what I like to call this “acceleration moment” didn’t happen on its own. This journey has always been about people. People make great products, and companies. Nothing else. Every battle we had to win, every challenge we had to overcome, every product we had to launch, carrier to connect, and client to win wasn’t the result of any individual, it was the result of an amazing, collegial team working days, nights, and weekends, and having fun in the process. Even in the toughest times, you, team, made it feel so much easier. We were one, a pack, bringing down obstacles standing in our way, one after the other. Now, it’s time to accelerate what we’ve built!

I am so excited by the unique combination of PayPal’s 8 million merchants, brand power, risk management expertise, and financial stability, with Zong’s Carrier DNA, its largest direct carrier payments network, product innovation, and best-in-class carrier billing technology. This industry first is going to allow us to scale what we’ve built over the course of the past 3 years (and then some) in a massive way!

I’d like to thank all of our merchant partners. Over 2 ½ years ago after chasing them for months, Facebook accepted to start testing mobile payments in the now defunct Gift Store. We then worked very closely with its amazing teams to build the ideal experience for Facebook Credits. This whole experience has been nothing short of amazing. Experiencing the rise of the biggest social network over the course of the past couple of years to over 700 million users has been phenomenal. For having seen it from the inside over a sustained period of time, I can now say that Facebook’s success has nothing to do with luck. It’s all about vision, sheer talent, energy, and culture. Other key partners along the way include amazing companies and leaders like IMVU, Sulake (makers of Habbo Hotel), Big Fish Games, Sony Online Entertainment, Zynga, Playdom (now Disney), Bigpoint, and thousands of other amazing companies we have the privilege of serving. To all of you: thank you for trusting us at face value, when we were a tiny team in our cramped Spartan office. Stay tuned for a lot more innovation and scale, now that we’ve joined forces with PayPal. You won’t be disappointed with what we have in store for you!

To our 250 carrier partners around the world, thank you for letting us leverage your unique, and amazing capabilities to build a global mobile payments business. We’re all very excited at PayPal, and at Zong, to massively scale this business for you in the months to come.

Building a great company is also a factor of great investors. Starting with our early Angel Investors such as Eric Babecoff, and  later Ossama Hassanein from Newbury Ventures, who believed in us way back when in 2005 with Echovox. Frederic Court from Advent Venture Partners, who became our BD arm in Europe, sending us leads like a machine, and supporting us all along the way. Then finally when Zong was spun-off from Echovox, Dana Stalder from Matrix joined us, and was so instrumental in scaling our business, becoming my mentor, and guiding us in this amazing transformation that happened in the past 12-months.

I really can’t wait to join Scott Thompson’s team over at PayPal. The energy, passion, and drive of the team combined with PayPal’s unique scale and capabilities in payments convinced me this was the right way to accelerate what we’ve built. Most of e-commerce will shortly become m-commerce, and I genuinely believe that PayPal, hand-in-hand with wireless carriers around the world will win in a big way. We’ll be working very hard on things that will blow your mind. So stay tuned for a lot more mobile payment awesomeness!

—David Marcus (@davidmarcus)

ZONG RAISES $15M IN FUNDING FROM MATRIX PARTNERS

Funding Will Be Used To Further Its Market Leadership, Expand Merchant and Carrier Networks and Continue Growth into International Markets

PALO ALTO, Calif., April 27, 2010 — Zong (www.Zong.com), the leading mobile payment service used by online gaming and social networking web sites, announced today that it has completed a $15M round of funding led by Matrix Partners. Formally a division of Echovox, Zong is now a standalone company headquartered in Palo Alto, and will use the investment to further market leadership by accelerating the growth of its merchant network in both the US and International markets and through funding the rapid expansion of its mobile carrier network.

Zong is the mobile payment provider for Facebook Credits, a new virtual currency platform being deployed across the Facebook network of over 400 million monthly active users. Zong also works with thousands of other merchants in a variety of spaces including: popular virtual worlds, online gaming, social networking and digital content properties. Zong is the only mobile payments service that combines carrier billing with credit, debit and prepaid cards allowing Zong to be the first company to allow multiple payment options via the mobile phone.

“We are thrilled to have the support and guidance of Matrix Partners, which has a phenomenal track record in developing select mobile, wireless and internet companies,” said David Marcus, founder and CEO, Zong. “With this comes the privilege of working closely with Dana Stalder, who as a result of his extensive experience with PayPal, will be of great value to our team.”

Dana Stalder, general partner of Matrix, will join Zong’s board of directors, bringing more than 20 years of experience to the company. Dana has extensive knowledge in financial services and ecommerce, having served in executive positions at Netscape, eBay and PayPal. Dana also initiated a number of other startup projects, including PayPal Mobile and the PayPal Developer Platform.

“Matrix’s message has been clear. We are committed to helping build significant, industry leading companies and Zong fits that bill,” said Dana Stalder. “Zong is at the forefront of the evolution of the payments space and we hope to play a key role in its continued growth and success.”

About Zong
ZONG is the leading mobile payment service used by online gaming and social networking sites around the world.  Its frictionless payment experience converts shoppers into buyers at rates up to 10 times greater than traditional payment methods.  ZONG leverages direct connections with mobile network operators around the world to provide consumers, merchants and publishers a secure payment solution with unrivaled connectivity and service quality.  ZONG is the mobile payment provider for Facebook Credits and also works with hundreds of leading destination sites, such as Gaia Online, IMVU and Aeria Games. Reaching over 1.5 billion mobile users, ZONG provides local payment capabilities in over 30 countries in 16 languages.  ZONG is the only mobile payment service that combines the high conversion rates of carrier billing with the low costs and flexibility of payment card networks.  ZONG is based in Palo Alto and Geneva, and is backed by Advent Venture Partners and Newbury Ventures. For more information, please visit www.zong.com.

About Matrix Partners

Matrix Partners is a premier venture capital firm that has generated outstanding returns for over three decades. The firm has delivered several of the industry’s top performing funds of all time. Matrix Partners has offices in Waltham, MA; New York, NY; Palo Alto, CA; Mumbai, India; and Beijing and Shanghai, China. The firm has been fortunate to have invested in game-changing, industry-leading businesses such as Apple Computer, Sandisk, Veritas, Sycamore Networks, Phone.com, Starent Networks

This summer we were honored when IMVU, the leading avatar-based social network and industry pioneer, chose us to be their mobile payments partner. With over 40 million users all over the world, IMVU built their own in-house mobile payments solution. After operating their own platform for a couple years, they decided to try us on for size.

We think the fit is nice: IMVU is seeing a 50% lift in revenue after switching to ZONG. Learn all about the background and how they did it in our IMVU Case Study.

We’ll be at the NY Games Conference this Wednesday, Sept. 30th. Hill Ferguson, our head of Product and Marketing, will be on a monetization panel discussion at 4 pm. Richard Borenstein (richard [at] zong [dot] com), our head of sales, will also be around. Send him a note if you’d like to meet up while we’re in NY from the 29th-1st. See ya there!

Howdy. Interested in learning all about Virtual Goods and monetization strategies? Come to the ENGAGE! Expo this Wed and Thurs for a full line-up of great speakers and networking opportunities.

Use this promo code and get 15% off the ticket price for an All Access pass: VALVIP

If you’re coming to the show, be sure and checkout the monetization panel discussionat 4:00 pm on Thurs. Our Founder & CEO, David Marcus, will represent ZONG. If you’d like to arrange a meeting with a ZONG representative, just reply in the comments or shoot us an email at sales [at] zong [dot] com. Hope to see you there!

We’ve submitted a proposal to South by Southwest (SXSW) to talk about the future of mobile payments. The good folks at SXSW liked our proposal enough to put us up for a vote, so we need your help. How can you help, you ask? Easy. Just go here and click the Thumbs Up button next to our proposal. You will need to register to vote, but that only takes about 10 seconds. Thank you for your support.

Checkout the life story of Zong in the video below. Turn up the volume to get the full effect.

Viva la revolucion de movil!

We’re now live in Mexico and Chile, giving you the ability to accept mobile payment from over 90 million consumers. But we’re not done yet, Papi. Stay tuned for Colombia and Brazil and also some more gems in Eastern Europe. Checkout our Coverage to see where we’re live and where we’re going.

Que les vaya bien!

We’re excited to be processing mobile payments in two more countries this month. Same as in most every other country, we have 100% mobile carrier coverage to maximize your payment conversion rates. Contact us if you want to turn on these markets for your account.

Other news: check out our May Newsletter for a smattering of Zong news, humor and other tidbits.

We recently conducted a consumer survey to better understand our customers’ customers. As marketers, the downside to having a frictionless end user payment experience is that we don’t always know a lot about the people making the payments. How old are you? Why did you select the “Pay by mobile” option? Do you even have a bank account? These are the kinds of questions our survey was designed to answer.

Here’s what we learned, in classic “Myth vs Fact” format:

Myth – Mobile payment users are just a bunch of 12 year olds using their parent’s cell phones to make payments.
Fact – Over 88% of mobile payment users are 18 or older. The distribution skews younger with about 60% between 18 and 30 years old.

Myth – Mobile payment users only use mobile because they don’t have bank accounts or credit cards.
Fact - 76% of mobile payment users have a bank account or credit card.

Mobile payment users have plenty of options, which begs the question, “why do you use your mobile phone to pay?”

We’re glad we asked:

34% said they used mobile because “it’s fast and easy”
22% said because “it’s fun”
20% said because “i know it will work”
14% said because “it doesn’t seem like I’m spending real money”
10% said because “i don’t have a bank account or credit card”

Folks, mobile payments are becoming mainstream.
Good stuff.