Phone cash system closes down

The decision means that its 750,000 customers can no longer use their phones to pay bills online and in the real world.

The company said all outstanding transactions will be honoured as its service shuts down.

The company will now concentrate on selling payment systems to other companies. But it will continue its consumer service in Austria.

Service sale

Paybox was founded in 1999 by Mathias Entenmann and has its largest number of customers in Austria and Germany.

The system it set up allowed people to settle bills in restaurants, pay cab fares, buy train tickets and buy CDs and other goods online via their mobile phone.

In London several smart West End restaurants signed up to use the service.

Paybox tried to establish itself as a payment system in the same vein as credit card giants such as Visa and Mastercard but has been forced to admit defeat.

"We deeply regret this step," said Mr Entenmann in a statement issued by the company.

"Without partnering with banks and telecommunications [providers], it would not be possible for us to achieve a critical mass of active users as the only provider of a universal mobile payment method worldwide," said Mr Entenmann.

As it has not been able to forge these alliances, the company has decided to restructure and end its consumer service.

The statement blamed its demise on the slow growth of the numbers of people willing to use their phone as a way to pay and the general economic conditions which made investors reluctant to sink cash into technology ventures.

The company will become Paybox Solutions AG and concentrate on selling and supplying payment systems to businesses.

The majority of shares owned in Paybox by Deutsche Bank were bought out by the management of the company in late 2002.