Startup to Take on PayPal

A secure electronic payments startup plans to challenge PayPal, but with a twist: It permits transactions for online pornography and gambling, which PayPal does not.

Pmints, which was founded by a graduate student at the University of Virginia's Darden Graduate School of Business Administration, will officially launch its payment services this fall. It's currently beta-testing the payment service.

It plans to peg a demographic of Internet users aged 21 to 35, about 68 million of whom bought adult goods online last year, according to published reports. Pmints will also handle gambling payments outside the U.S., although the practice is illegal here.

Unfortunately for Pmints, the stigma attached to sex and gambling has already backfired on the startup effort. UVA this week cut Pmints out of its business incubator program, which provides startups with office space, stipends, faculty access, and legal support.

That apparently didn't rattle Rafael Diaz-Tushman, founder and CEO of the company, however. "It's not going to affect the company," he said in an interview with The Daily Progress in Charlottesville, Va. "Things are going well."

Diaz-Tushman said in published interviews that he decided to get his MBA and start up his own payment service after PayPal froze his own account. The payment arm of eBay had discovered that his former movie and gaming rental site business included adult DVDs. He says there's big money in the adult industry, and that Pmints will fill that void.

Diaz-Tushman had not responded to requests for an interview at the time this article was posted.

— Kelly Jackson Higgins, Senior Editor, Dark Reading