Greylock Partners announced today that they would be investing $4 million in New York City based company, Payoneer.  Payoneer is a company that allows companies and business partners to pay each other via MasterCard online.  Payoneer is a private company that markets and manages prepaid MasterCard cards and works with the Royal Bank of Scotland and the First Bank of Delaware to process card transactions.

Upon realizing the importance of developing strong partnerships with Web 2.0 companies, Payoneer currently works with selected business allies such as Metacafe, Amie St., oDesk, and BitWine.  Using such a service could also be very beneficial for Web 2.0 start-ups with only a few employees that share office expenses.

“The Internet payout space may well become a killer application in the next few years as Internet companies transition to smarter ways to pay out their partners around the globe,” stated Moshe Mor, a partner at Greylock Partners. “Payoneer’s team has deep payments experience, and an already impressive track rate of customer adoption and solutions. We’re delighted to work in partnership with Payoneer to fuel the company’s expanded market presence.” 

“Web-driven businesses have the unique opportunity to use payments as a retention tool, not just a cost line-item,” stated Yuval Tal, the CEO and founder of Payoneer. “With our additional funding on board, we’ll be adding to our team, expanding our service offerings, and working aggressively to win new accounts during this exciting high-growth time in our market.” 

Payoneer was founded in 2005 and maintains a research and development facility in Tel Aviv, Israel.   The co-branded MasterCards provided by Payoneer can be used anywhere whether it is in any store, online, or ATMs that MasterCards are accepted.

Proven Model Cases:
Citigroup Inc./eCount Inc.
“The prepaid card market is experiencing high growth, and is currently estimated at more than $2 trillion worldwide, as corporations and consumers continue to move from paper checks to electronic-based payment methods” states a Citibank press release announcement of the fairly recent eCount Inc. acquisition.

eBay Inc./PayPal
Another proven model is the legendary $1.5 billion acquisition of PayPal.  In July 2002 eBay acquired PayPal for $1.5 billion in stock.  PayPal now has 114 million customers as of October 2006 over 103 markets and 17 different currencies.

It is expected that with this round of funding that Payoneer will become hypercompetitive amongst some of the major aforementioned players out there.  I have no doubt in my mind that we’ll start seeing the Payoneer logo quite a bit more as we shop online.

[Information Source: E-mail from PR Representative for Greylock Partners]

Downloadable music online web store, Amie Street has recently launched a new pricing scheme for music.  The price is determined by the frequency of how many times a song is downloaded.  For example, R&B singer, Choklate’s song, “Waitin’” is available for 23 cents on Amie Street in comparison to 99 cents on iTunes and Napster.

The tracks that are submitted newly are free, but then begin increasing as more people download the song.  After about 130 downloads, songs are capped at a price of 98 cents to compete against the standard 99 cent price. 

The Wall Street Journal has reported a couple of risks with Amie Street.  The first risk is that many of the songs that are on Amie Street are recorded by less mainstream, independent artists that many people may not have heard of or may not be interested in paying for.  However, the Amie Street founders stated that they are countering this risk by showing that this is the point of the website, exposing users to unfamiliar music.  New York based, marketing research company, Jupiter Networks states that the problem with Amie Street is that the low-cost may tend to be associated with low-quality music. 

Another risk pointed out by The WSJ is that MySpace will soon allow the bands that have an account on the #1 social network to allow users to pay for their music.  Not only that, but the musicians can set their own price as their music is their own property.  At that point, Amie Street needs to figure out a business model that gives the bands on their website an incentive and possibly take away from the market-share that MySpace has which is over 3 million bands and musicians.  Currently, Amie Street gives their musicians a 70% cut of all songs sold.  The MySpace revenue-sharing percentage is not currently known.

Amie Street was founded by 3 Brown University alumni students.  The profiles of the three founders and three-person development team can be found [here].