The past year has been in financial distress for billions, and among the specific difficulties, the most elementary is the payment of utilities, taxes, and other government fees – the systems for which simple or flexible payment is seldom established. promise aims to change this by integrating with official payment systems and offering more forgiving terms on fees and debts that people cannot handle all at once, and has raised $ 20 million for this.
With every penny going towards rent and food, it can be difficult to raise the money to pay for an erratic bill like water or electricity. They are less likely to be turned off in the short term than with a mobile plan. Hence, it is safer to kick the can down the street … until a few bills add up and a family is suddenly looking at hundreds of dollars in unpaid bills and in no way trying to split them up or pay them over time. The same applies to tickets and other fees and fines.
The CEO and co-founder of Promise, Phaedra Ellis-Lamkins, explained that here (among other things) current systems are failing. In contrast to buying a TV or piece of furniture, where payment plans can be offered with one click during online checkout, there is often no such option for municipal ticket payment offices or companies.
“We found that when you offer them reminders, accessible payment options, and flexibility, people who have difficulty paying their bills will want to pay and pay at extremely high rates. The systems are the problem – they’re not intended for people who don’t always have excess cash in their bank accounts, ”she told ProWellTech.
“For example, they assume that someone who makes their first payment on the 15th at 3pm will have the same amount of money on the 15th at 10pm the next month,” she continued. “These systems fail to recognize that most people struggle with their basic needs. Payments may need to be made weekly or split into multiple payment types. “
Even those who offer plans are still seeing a lot of defaults, at least in part due to a lack of flexibility, Ellis-Lamkins said – failure to make a payment can result in the entire plan being canceled. In addition, it can be difficult to even sign up.
“Some cities offer payment plans, but you’ll need to register in person, fill out a multi-page form, provide proof of income, and meet restrictive criteria,” she said. “We were able to work with our partners to use self-certification to simplify the process instead of filing tax returns or other documentation. We currently have a payback rate of over 90%. “
Promise acts as a sort of intermediary who easily fits into the agency or utility, which in turn makes anyone who owes money aware of the possibility of the different payment system. Similar to purchasing from an online store, you may see various payment options, including installments.
Credit: promise
The user signs up for a payment plan (the service is mobile-friendly as this is the only form of internet many people have) and Promise takes care of that end by doing reminders, receipts, and processing and depositing the money instantly the agency forwards in – the company does not cover the costs in advance and collects on its own terms. In essence, it is a flexible payment mechanism that specializes in government agencies and other publicly available fee collectors.
Promise makes money through subscription fees (i.e. SaaS) and / or through transaction fees, whichever makes more sense for the particular customer. As you can imagine, it makes more sense for a utility company to pay a few dollars to raise $ 500 more safely than to take the chance not to get any of that $ 500 or resort to a more cumbersome and expensive collection Methods.
Lest you believe this isn’t a huge problem (and therefore not a huge market), Ellis-Lamkins took note of a recent study by the California Water Boards that found that 1.6 million people in the state had live a total water debt of 1 billion US dollars – an average of 500 US dollars in eight households.
These numbers are likely worse than normal given the immense financial pressure the pandemic has put on nearly all households – but like payment plans in other circumstances, households with many incomes and types find their own reason to use such systems. And pretty much anyone who had to deal with a dull utility payment page would appreciate an alternative.
The new round brings the company’s total to over $ 30 million, of which $ 10 million was raised immediately after exiting Y Combinator in 2018. Funding comes from existing investors Kapor Capital, XYZ, Bronze, First Round, YC, Village and others.