Paying bills is a stubborn holdout in the digital shift, as bills come in paper form by snail mail or via email. Often, there aren’t many digital payment options, and even when there are, interfaces can be clunky and friction-filled — all adding to the pain of an already painful process.
It’s payments function ripe for disruption, and many keep hammering away at it. Sometimes, however, it takes the right person getting very frustrated to solve for the intractable. That’s essentially the origin story behind mobile bill pay solution Papaya, whose CEO and co-founder, Patrick Kann, moved to the U.S. and was astonished at the obstacles to paying one’s bills. So, he began working on a fix.
Operating under the radar for several years of research and development, Kann and his team established valuable new intellectual property (IP) that turns a smartphone into a smart bill reader, enabling users to snap a photo of a bill with an app and pay, all in a single click.
Speaking with PYMNTS’ Karen Webster, Kann demonstrated Papaya’s IP by tearing a paper bill into pieces and mixing them up. The app was still able to accurately read the bill. Its predictive technology loads the logo “if we have it in our database” he said, “and if we don’t have the [correct] logo, it brings something that is similar. If it’s to a dentist, we bring a dental logo.”
Kann said Papaya’s app relies on two core pieces of IP to accomplish the task. One uses imaging technology to capture the bill and extract the data from it — “no matter what, even bills that we have never seen before.” The second component of Papaya’s proprietary IP is the payments piece. Papaya doesn’t charge consumers for its services. It generates revenue by taking a small portion of the card-processing fee for each transaction.
“We developed a number of direct, indirect and automation technologies so that any bill, no matter what, is paid,” Kann said.
Companies need not register, although thousands have.
“Our automation mechanisms allow us to make payments to 100% of merchants in the U.S.,” Kann told Webster. “You can pay absolutely anyone and everyone. Our technology will allow it.”
Rebuilding Bill Pay Better
Papaya Co-Founder and Chief Technology Officer Jason Meltzer is an iRobot alum who worked on the Roomba robot vacuum, and Kann said he sees correlations in how Papaya was engineered.
Calling the artificial intelligence (AI) elements comparable, Kann said, “The Roomba needs to work in any house, no matter the shape, color, quality of the floor, dirt level, it needs to come in and learn how to navigate it. Our technology, in many ways, has a similar flavor. No matter what bill or what information is provided, our technology has to extract the appropriate information and work in 100% of the cases. I’m not talking about 99.9%. It has to be 100% percent of cases.”
A testament to the company’s IP innovation is the fact that it has done no marketing up to this point, and in fact hasn’t seen the need to even set aside a marketing budget.
In the U.S., “tens of thousands of businesses have seen that our technology brings additional payments volume to them, so they are recommending Papaya as a payment method,” he said. “There are tens of thousands of health institutions, government agencies, even for instance if you are unlucky to go to Las Vegas and get a parking ticket, 100% of parking tickets in Las Vegas come with Papaya as the recommend payment method. That’s how we are growing.”
Expansion Is On-Mission
In December, Papaya raised $50 million in a Series B funding round, and Kann told Webster that all of the money will be used to fill out the team and “a lot of exciting things that we are developing in our pipeline, so a large majority will be invested on the product and engineering fronts.”
As word-of-mouth builds about the innovative “bill understanding technology” as Papaya calls its platform, Kann said user behavior is developing along intriguing lines.
Noting that 20% of users link Papaya to bank accounts, Kann said “about 50% of them pay via debit card — that’s their preferred payment method — and the remaining 30% is via credit cards.”
Kann said he gives his personal email to 100% of Papaya users — a risky move that may blow up his inbox — but that also supplies invaluable insights into consumer and merchant viewpoints.
“Merchants learn that their customers are paying via Papaya, and they immediately think this is an amazing technology to add,” he said. It works the other way as well. “I think the two largest merchants that are recommending Papaya to their customers came to us” via referral.
Saying that Papaya is “absolutely” considering moving into buy now, pay later (BNPL), Kann told Webster, “In the U.S., the No. 1 source of stress is finances, with 67% of families suffering around finances, and bill payment is at the core. We want to eliminate all the stress around bill payments. We want to address all of these problems, one by one.”