Many payments startups face the difficult task of getting consumers to switch their lifelong habits. Waspit says college students are the best audience to target because they are tech-savvy and willing to experiment.

"This demographic is willing to try anything and everything," says Richard Steggall, CEO of Waspit. "They want to be influencers within their peer group; they want to be seen doing new and cool things."

In mid-January, Waspit plans to announce a new card issuer and processor for its social commerce application. The issuer allows the company to provide debit cards to complement the app.

In addition to handling payments, the Waspit app provides users with access to banking details, social media sites such as Facebook and Foursquare, review sites like Yelp and daily deal sites like Groupon. Waspit was founded in late 2010 in London, and in March 2011 the company moved to New York, where it released its current product in October.

Exclusively in the U.S., the mobile payment product has seen more than 5,500 students register with about 16,000 more students waiting for an invite. Ambassadors — students that speak to peers to promote the company — total 96 across 34 university campuses. Next year, Waspit will roll out its product in the UK.  Waspit's monthly service fee is $2.

"The big banks really didn't have the motivation to better this market," Steggall says.  "Offering credit is something which is now challenging given the Card Act of 2009, and with the pressure on banks to implement more reasonable fee structures, especially when it comes to the younger demographic, there are few other ways banks are able to claw back their acquisition and ongoing servicing costs."

Waspit's strategy of focusing on younger adults makes sense at a time when many companies are still experimenting with new mobile payment systems, says Gil Luria, an analyst with Wedbush Securities.

 "This demographic has more tolerance for something that's not working 100% … to products that aren't quite perfect," he says.

Younger consumers are less inclined to walk into a financial institution branch or hold on the phone for the call center, Luria says. Instead this demographic wants to deal with mobile in a different way, by using web services.

"Students don't have much money, but they still spend a lot of money on tuition, books, alcohol," says Steggall. There are 20 million people within the young adult demographic that is "largely untapped," he says.

Waspit "is targeting a bunch of broke kids eating ramen noodles for four years," says Ben Jackson, senior analyst at Mercator Advisory Group. "It's a very temporary demographic and in turn can be very expensive."

Plus Jackson says there are tons of competitors in the market to capture college students. Many university student IDs double as a payment card.

Student's ID cards at North Caroline State University double as MasterCard-branded prepaid cards. In April, U.S. Bancorp supplied new students with the open-loop cards, Wolfpack One cards.

University of San Francisco students use contactless mobile payments through CBORD to pay for laundry. The mobile payment application was launched in June and was the first time the Ithaca, N.Y.-based company offered contactless technology to support student spending.

Waspit is ahead of rivals since it's tying the service to social networking sites, like Facebook and Foursquare, Jackson says. However, Waspit's business plan will shift as the company figures out how to tailor the product to specific universities, he adds.

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