The past year has been marked by financial hardship for billions, and among the specific difficulties is that of paying utilities, taxes and other government charges – systems for which are seldom put in place for payment. easy or flexible. Promise aims to change that by integrating with official payment systems and offering more lenient terms for fees and debts that people can’t handle at the same time, and has raised $ 20 million to do so.
When every penny is spent on rent and food, it can be difficult to raise the money to pay an irregular bill like water or electricity. They are less likely to be closed on short notice than a mobile plan, so it’s safer to throw the can down the road … until a few bills add up and a family is suddenly looking at some hundreds of dollars in unpaid bills and no way to split or pay them over time. Ditto for tickets and other fees and fines.
Promise CEO and co-founder Phaedra Ellis-Lamkins explained that it is (among other things) that current systems fail. Unlike buying a TV or furniture, where payment plans can be offered with one click when paying online, there is often no such option for payment sites. payment of tickets or municipal utilities.
“We’ve found that people who struggle to pay their bills want to pay and will pay extremely high rates if you give them reminders, accessible payment options, and flexibility. The systems are the problem – they’re not designed for people who don’t always have excess money in their bank accounts, ”she told TechCrunch.
“They assume, for example, that if someone makes their first payment at 10pm on the 15th, they’ll have the same amount the following month from the 3pm to 10pm,” she continued. “These systems fail to recognize that most people are struggling with their basic needs. Payments should be weekly or split into multiple payment types. “
Even those who come up with plans still see many payment failures, due at least in part to a lack of flexibility on their part, Ellis-Lamkins said – failure to make a payment can result in the cancellation of the payment. whole plan. Also, it can be difficult to register in the first place.
“Some cities offer payment plans, but you have to go there in person to register, fill out a multi-page form, show proof of income, and meet restrictive criteria,” she says. “We were able to work with our partners to use self-certification to facilitate the process rather than providing tax returns or other documents. Currently, we have a reimbursement rate of over 90%. “
Promise acts as a sort of middleman, fitting in lightly with the agency or utility, which in turn makes anyone who owes money aware of the possibility of a different payment system. It is similar to how you can see various payment options, including installment payments, when making a purchase from an online store.
The user signs up for a payment plan (the service is mobile-friendly because it’s the only form of the internet that many people have) and Promise manages that end, with reminders, receipts and processing, by transmitting the money to the agency as and when. en – the company does not cover costs in advance and does not collect on its own terms. It is essentially a flexible and complementary payment mechanism that specializes in government agencies and other collectors of public rights.
Promise makes money through subscription fees (i.e. SaaS) and / or transaction fees, whichever makes the most sense for the given customer. As you can imagine, it makes more sense for a utility to pay a few dollars to be safer to raise $ 500, than to take a chance on getting nothing out of that $ 500, or having to resort to debt collection. heavier and more expensive debts. methods.
Lest you think it’s not a big deal (and therefore not a big market), Ellis-Lamkins noted a recent California Water Board study showing that there are 1.6 million people with a total of $ 1 billion in water debt in the state – one in eight households is in arrears to the tune of $ 500 on average.
These numbers are probably worse than normal, given the immense financial pressure the pandemic has placed on nearly every household – but like payment plans in other circumstances, households of many incomes and types find their own reason. to take advantage of these systems. And just about anyone who has had to deal with an obtuse-designed utility payment site would appreciate an alternative.
The new round brings the company’s total raised to over $ 30 million, with $ 10 million that it raised immediately after leaving Y Combinator in 2018. Funding comes from existing investors Kapor Capital, XYZ, Bronze, First Round, YC, Village, and others.