Online consumer bill payment service Paytrust.com announced today that it has received $30 million (US$) in second-round venture capital from American Express, Japanese Internet investor Softbank and a variety of venture capital firms.
The Princeton, New Jersey-based payment service — a flagship service of Secure Commerce Services, Inc. — said it will use the money to continue to expand its marketing and operations, which the company claims has grown substantially since its June launch.
GE Equity, Goldman Sachs and Thomas Wiesel Partners also joined in the financing. AT&T Ventures and Spectrum Equity — both original backers — participated as well.
“Paytrust.com is an exciting example of the next generation of e-convenience services, with a proven track record of rapidly delivering innovative technology and real value to customers,” said Softbank Venture Capital executive director Gary Rieschel. “We feel that Paytrust will be a runaway success.”
American Express Senior VP Larry Kutscher said that his company is looking forward to working with Paytrust and allowing its cardmembers to use the company’s service to pay their bills online.
A Challenging Proposition
The company’s investors are obviously confident that Paytrust can clear some of the obstacles that have prevented the online bill payment service from exploding after its inception a decade ago.
Yankee Group estimates that some 4.5 percent of households with a personal computer paid bills online last year. While that figure is not one to scoff at, it does not approach some of the threshold marks set by services such as online trading or online banking.
The main problem for the industry is that — despite the technological advances over the years — it is still driven by paper transactions. Most companies continue to bill customers the old-fashioned way, meaning that companies like Paytrust have to wade through voluminous amounts of paper to pay bills for its customers.
For $7.95 a month, Paytrust will have a customer’s bills sent to its post office box and then alert customers by e-mail after it scans the bills and uploads them on its site. The company said that 20,000 people have signed up for the service since June and that it has paid 50,000 bills. It is currently offering a free, three-month trial service.
Customers pay their bills through pre-existing checking accounts and direct Paytrust on which bills to pay. Paytrust can also balance a customer’s checkbook.