Payment tech startup Promise tackles utility billing
As state and local governments try to weather the pandemic, officials are faced with the task of making up for backlogs in utility payments — all those dollars owed to them by residents who lost income and savings during the COVID-19 outbreak.
An Oakland, California-based software-as-a-service company called To promise is positioning itself to help public servants with this daunting task, which is part of the trend for governments to become more digital with payments.
The tech company – which gained some attention in 2018 when the hip-hop entertainer Jay-Z’s Roc Nation participated in the $3 million funding round for Promise – wants to tackle the problem of the estimated $22.3 billion in overdue utility payments at national scale.
In New York and New Jersey, those overdue utility bills exceed $2.4 billion, according to a recent report by the New York Timesfurther illustrating the scope of the problem.
When it comes to these payments, Promise helps residents behind on their bills develop repayment plans and access assistance programs, and in a way that can often be more nimble than normally associated with public agencies. , said Promise co-founder and CEO Phaedra Ellis-Lamkins. Government technology.
“COVID has shown that people are late who were never late,” she said. “There are more people behind it than ever before, and public bodies don’t know how to deal with it.”
At the height of the pandemic, up to 20% of U.S. households were behind on utility payments, according to the National Governors Association. These households often received assistance or assurances that services would not be cut.
The times have changed.
Battered by the long-term impact of pandemic job losses and overdue bills — and now inflation — overdue utility customers face the expiration of these moratoriums and mounting demands. to catch up on payments.
Governments, for their part, need the revenue owed to them, especially given the drop in tax revenues during the pandemic.
But that often means late fees and other costs for customers, as well as inflexible payment dates and options. Additionally, public agencies aren’t always equipped to offer the flexible payment options common in the private sector, Ellis-Lamkins said.
“The private sector has learned that if you want people to pay you, make it easy to pay,” she said.
Promise’s customers are governments, and the company’s technology is designed for tasks such as developing interest-free utility payment plans and getting utility assistance to residents faster than agencies cannot do it themselves.
Washington state, for example, has a list of 73 programs for electric and natural gas utilities, according to the National Governors Association — and it’s Promise’s goal to make sure agencies can get that help to clients before, say, it expires or otherwise disappears from the budget.
The company makes its money through fees charged through its software-as-a-service platform and rewards for meeting specific bill reimbursement goals.
According to Ellis-Lamkins, approximately 90% of residents who participate in Promise-enabled programs end up paying off their debts. She said that after the company started working with Louisville Water in Kentucky, more than 20,000 residents received help to stay on their water.
Governments can also use the company’s software for tickets and other resident fees and bills that often go unpaid.
Although government agencies often offer their own payment plans for such debts – particularly when it comes to traffic tickets or other citations – these plans generally require a debtor to have a certain level of debt before the registration is allowed, she said. This level of debt is often higher than the initial costs. Such a debt can also be accompanied by penalties such as the suspension of the driver’s license.
In 2018, when Jay-Z was part of this investment round, Promise focused on bail and related parts of the criminal justice system, using its technology to help keep those accused of crime out of harm’s way. prison through support related to monitoring and treatment obligations. .
Although “Promise is no longer closely involved with Jay-Z,” Ellis-Lamkins said, the company remains active in the area of criminal justice, using its technology to help with reimbursements in that area.
Promise’s current goals – whether in justice, ticketing or public services – fit into the broader trend of state and local governments turning to more and more digital tools for payments.
Digital transformation doesn’t just happen with water utilities – just move to the cloud has proven effective – but also involves social media and cryptocurrency. Technology upgrades can even help governments catch up on arrears in supplier payments.
Utilities are also moving towards installment or revenue percentage plans — a trend that would appear to bolster the Promise value proposition. For example, the National Governors Association said various types of these programs are in place in states such as Colorado, Illinois, Minnesota, New Hampshire, New Jersey, Ohio, and Pennsylvania.
For Ellis-Lamkins, the underlying theme of Promise’s utility payment plan is an optimistic view of human nature, even in these difficult times.
“The biggest lesson is that people want to pay off their public debts, and most systems are designed in a punitive way,” she said.