Anyone who texted donations to the American Red Cross recently knows your cell phone is on its way to replacing your wallet.

From big banks and wireless companies to startups, there is fierce competition over who enables the new payment systems emerging. One Palo Alto-based startup thinks it has a plan to win: Bling Nation has $33 million in venture funding, advisors from most of the major banks, and today the company is announcing a buzz-worthy new board member: Facebook vice president Chamath Palihapitiya.

Thinking local and global

Founded in 2007, Bling Nation is trying to capture mobile transactions and payment industry revenues by going local.

Co-founder Meyer Malka says two-thirds of consumer deposits in the US are with community banks. Targeting towns with robust local banks, the company gets its buy-in and then wins over local merchants. Banks do the marketing by providing customers with a cobranded payment sticker that contains an RFID tag. It’s device agnostic so you can attach it to any smartphone. The local pizza parlor or dry cleaner gets a “Blinger” for accepting payments. The customer taps the Blinger to process a transaction and a receipt appears immediately via text message.

Malka and cofounder Wences Casares are uniquely positioned to understand this market. They’ve been in the startup business for a dozen years, working with financial services and telecom companies mostly in Latin America. Most recently, they founded Banco Lemon, which focused on Brazil’s large population that didn’t use banks and grew to 7,000 branches before being purchased last August by Banco do Brasil.

Bling Nation is betting customers will like this because it’s easy and they will eventually be able to access all sorts of reward programs. The system will allow community banks to compete with the big commercial banks. And as for merchants? Meyer says the transaction costs them about half the price of traditional cards like Visa or Mastercard because there is no network: transactions are authorized by the bank directly and the payment simply moves effortlessly between merchant and bank. Meyer says merchants will also appreciate an easy-to-manage rewards program that draws customer attention. Also, shopping local is a powerful draw for consumers and businesses alike these days.

Forrester Analyst Ellen Carney calls Bling Nation one of the hottest banking tech companies to watch in 2010. She writes that it is “ideal for low-value but high-volume transactions such as buying a transit pass or your morning cup of coffee.” Because the system requires customers have a checking account, it’s also a good way to attract a new population of customers for banks who may have cell phones but no accounts.

So far, Bling Nation is up and running in just two local communities in Colorado. Meyer says roll outs are underway in several more. “It’s a complex space,” says Meyer. “There have been a ton of things that have tried and failed.” But with experience, funding and a power-packed group of advisors that include former executives from many of the largest financial companies, he and Casares certainly have a fighting chance.