This is cool.  Glad Providence will have a space like this for mobile workers.

I've met one of the co-founders of mPay (Mirek Kula) and am in the process of learning more about the company.  So I can't comment directly on their approach at this stage, but they have a solid team and I'm certainly curious to learn more.

We did indeed work on various payment mechanisms on mobile phones and PDAs at PayPal, and in fact my first job there was as Product Mgr for our wireless tools.  In the early days of PayPal we had products based on IR transfer (mostly for PDAs), then later WAP-based phones, and then after the company became part of eBay (and after my involvement) they developed some payment mechanisms using SMS short codes. 

While I'm pretty proud of what we achieved technically (we had one of the first secure WAP applications using WTLS, the mobile equivalent of SSL), the market reality is that mobile payments haven't taken off dramatically in the US for PayPal or anyone.  We have a fairly robust payment card infrastructure here (credit cards, PIN-based debit, prepaid/gift, etc) that's been harder to displace, though in places where this isn't the case mobile payments have fared much better (e.g. Philippines - heavy use of SIM cards as stored value).

Probably the biggest challenge w/ any new payments system is gaining critical mass of both buyers (payers) and sellers (merchants).  It's a classic chicken and egg problem... few buyers want to adopt a form of payment that isn't widely accepted and similarly merchants are resistant to additing another payment option if few consumers actually use it.

I think the YC model (and other similar startup boot camps) is interesting.  I'd tend to agree w/ Thorne and others who've already weighed in here that the coaching staff is probably the greatest factor in having a successful program.  They can help draw interest from good candidates, but more importantly need to commit time/energy to screening and then actively mentoring participants.

Personally, I think it might be best when starting a program like this to focus on a particular sector even if broadly defined.  For example, both Techstars and YC seem to stick to software / web services.  I think if you have a range of participants from different sectors, it becomes harder for them to draw as many common insights from one another and you have to have a broader set of mentoring capabilities.