An investor group led by payments industry veteran Ashish Bahl hopes to transform social-media phenomenon Twitter into an online payment system.

The investors have acquired Atlanta-based social payments startup Twitpay and focused it on helping charities raise dollars—via Twitter.

(Click here to read Twitpay co-founder Mike Ivey talk about his decision to sell and change the company's strategy.)

Twitpay is part of an ecosystem of services and applications that is transforming Twitter from a social-media site into a communications—and now an e-commerce—platform. Twitter is estimated to have about 100 million users.

Several nonprofits, including United Way and the Arthritis Foundation, are interested in leveraging social-media services such as Twitpay to help raise money in an increasingly digital world.

Twitpay is a speedy and cost-effective way for nonprofits to raise money globally, co-founder Michael Ivey said. “The service combines the simplicity of mobile giving with the power of social networking,” he added.

The nonprofit fundraising market represents a roughly $250 million annual business for payment processors such as Twitpay, said Bahl, who led the investor group along with Keith Meyers, a managing director in the investment-banking division at Morgan Keegan & Co. Inc.

While Twitpay is initially focused on a “low-fraud” category (charitable giving), it plans to expand into broader e-commerce—enabling users to pay for online content via Twitter, said Bahl, CEO of Acculynk and founder of Harbor Payments Inc.

Twitpay’s parent, Social Media Payments, may offer similar payment services on other social-networking sites such as Facebook.

The investor group acquired Twitpay’s assets for about $100,000 and plans to invest an additional $1 million into product development and marketing. Twitpay’s founders, Ivey and Don Brown, will stay on with the company.

Twitpay’s investors represent more than deep pockets. Equally important, Ivey said, is their “depth of experience and understanding of the payments industry and their connections in the nonprofit world.”

Twitpay was launched in late 2008 at Atlanta Startup Weekend 2—a 54-hour affair in which entrepreneurs voted on dozens of startup ideas and then collaborated to transform a handful of concepts into companies. Since that caffeine-fueled weekend, Twitpay has generated buzz and received the imprimatur of the New York Times.