- Promise will bring financial flexibility to outdated utility payment systems.
- The company makes money by subscription fees i.e. SaaS and transaction fees.
- The new round takes the total raised by the company to over $30 million.
The last year has been one of financial misery for billions. And among the basic difficulties is the elementary one of paying for electricity, taxes, and other government fees. The mechanisms for which are rarely set up for simple or flexible payment. Promise seeks to improve that by merging with official payment systems. It will provide more forgiving terms for fees and debts. It has raised $20 million to do so. When every penny is going into rent and food, it can be hard to muster the cash to pay an odd bill for water or electricity. They’re less likely to be cut off on short notice than a mobile contract, so it’s better to kick the can down the road. A family is staring at hundreds of thousands of unpaid bills and no way to break them up or pay over time. Same for fares and other penalties and fines.
The CEO and co-founder of Promise, Phaedra Ellis-Lamkins, clarified that this is where existing structures break down. Purchasing a TV or piece of furniture is where payment plans can be provided in a single click during online checkout. There often is no such option for municipal ticket payment sites or services.
CEO’s Remarks
“We have found that people struggling to pay their bills want to pay. And will pay at extremely high rates if you offer them reminders, accessible payment options, and flexibility. The systems are the problem and are not built for people who don’t often have a surplus of money in their bank accounts.”
“For example, they assume that if someone makes their first payment on the 15th at 10 p.m., they will have the same amount of money on the 15th at 10 p.m. next month,” she added. These mechanisms do not understand that most individuals are grappling with their fundamental needs. Payments can need to be monthly or split into different types of payments.
Also, those selling plans still see several failures to pay, due at least partly to their lack of flexibility, Ellis-Lamkins said. Failure to make a payment can lead to the termination of the whole package. Besides, getting enrolled in the first place can be hard.
“Some cities offer payment plans, but you have to go to sign up in person, complete a multiple-page form, demonstrate proof of revenue, and meet restrictive criteria,” she said. In comparison to offering tax returns or other documents. We have been able to collaborate with our clients to use self-certification to ease the process. We currently have over a 90 percent rate of repayment.
Services offered by Promise
Promise serves as a kind of intermediary, integrating lightly with the entity or utility, which in turn makes us aware of the probability of the different payment system owing money. It’s similar to how when purchasing at an online store, you could see different payment methods, like installments. The customer registers in a payment plan (the service is mobile-friendly since it’s the only type of internet that many individuals have) and Pledge manages the end of it, with notifications, receipts, and processing, sending the money to the organization when it comes in, the business does not cover the expense upfront and receive on its terms. It is a versatile bolt-on payment system that specializes in government departments and other collectors of fees facing the public.
Promise makes money by subscription fees (i.e. SaaS) and/or transaction fees, whichever makes the customer more useful. It makes more sense for a utility to pay a few bucks than to take its risk. Also, having to resort to more heavy-handed and costly methods of debt collection. California Water Boards indicates that there are 1.6 million people with a total of $1 billion in water debt in the state. One in eight households is late to an average of $500 before you consider that this is not a major issue. The new round takes the total raised by the company to over $30 million, counting the $10 million that it raised right after leaving Y Combinator in 2018. The funding comes from established investors such as Kapor Money, XYZ, Bronze, YC, Village, First Round, and others.
