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Dynamics Inc raises USD35m in series B funding

Dynamics Inc has closed an oversubscribed USD35 million Series B round of financing led by new investor Bain Capital Ventures. Dynamics launched its award-winning Card 2.0 technology last fall, and its products are currently in consumer trials with several top multinational payment card issuers.

Dynamics will use the funding to increase the size of its team and production capacity to support the continued US deployment of its Card 2.0 technology, which debuted at DEMO Fall 2010, winning the title DEMOgod and the USD1M People’s Choice Award. Card 2.0 also won Best of Show at FinovateFall 2010 and Best in Show at the 2011 Consumer Electronics Show (CES) for Personal Electronics.

With this investment, Dynamics will also continue to develop and deploy additional next-generation payments products such as battery-powered contact chip “EMV” cards, battery-powered RFID “contactless” cards, and phone-based payment systems.

“Payment cards generate more than USD3 trillion of annual purchase volume in the US alone, and card issuers spend more than USD20 billion annually to attract and retain cardholders,” says Jeff Schwartz, Managing Director, Bain Capital Ventures, who is joining the Dynamics Inc. Board of Directors. “Dynamics offers card issuers the ability to meaningfully differentiate their card products and to provide unprecedented payment functionality to their cardholders. Dynamics is the only company that provides issuers with this capability without requiring a change in the point-of-sale infrastructure, delivering breakthrough innovations within the established payments ecosystem. Dynamics’ technology and product applications have been enthusiastically validated by several top card issuers, payment networks, and consumer groups, and we believe this will be the most impactful technology company in the payments industry.”

“The 40-year business model cycles at card issuers are turning into three-year business model cycles,” says Joel Adams, General Partner, Adams Capital Management. “As such, the industry is demanding a fast-cycle payments platform. With this investment, Dynamics will have the first fast-cycle, high-volume consumer electronic manufacturing capability in the payments industry.”

Numerous payment applications can be realised with the Card 2.0® technology. For example, several top card issuers have recently expanded consumer pilots with Dynamics’ MultiAccount card, which enables both debit and credit accounts on a single card. This card has one button if a user wants to use a credit account and another button if a user wants to use a debit account. The electronics embedded in the card then re-writes the programmable magnetic stripe so the card can be used at any existing magnetic stripe reader. One of the first mobile wallets deployed in the US, this card allows debit card issuers to intelligently cross-sell credit products to their debit base – thus increasing purchase volume at retailers.

“Dynamics is deploying a payments platform that re-defines the boundary of consumer electronics design while building out a volume manufacturing capability that would rival the largest consumer electronics companies in the world,” says Jeff Mullen, CEO of Dynamics. “The Dynamics Card 2.0® products will finally give consumers choice at the point-of-sale. And, this is just the beginning. We will continue to introduce exciting new payments products that we’ve been refining in our labs over the last few years.”

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