What Pay Theory’s Seed Funding Means for Fintech at Large
Last week, Pay Theory announced that we closed our Seed Funding round led by Zeal Capital Partners, a Washington, D.C.-based venture capital firm known for its commitment to inclusive investing. With our funding hitting $2.5 million, it has me thinking about the impact that a small startup like Pay Theory is set to have. Beyond filling jobs and putting more resources behind our tech stack, this signals a far larger step for the Fintech space in general.
Why? In a completely unique model for using Fintech to improve inclusiveness, Pay Theory is trying to create solutions at the moment of payment for all parties, regardless of socio-economic status, and regardless of the way that someone would like to, or need to pay for the services that matter the most in their lives like school-related expenses.
Does your 9th grader need $75 to order a new band uniform online, and you’d prefer to pay for it in cash, over time? Pay Theory can make this happen, no problem.
Pay Theory is transforming the moment of payment for all families by giving them the option to pay for an online purchase in physical cash using a network of nearly 60,000 retailers nationwide, including Dollar General, CVS, 7-Eleven, and Walgreens. Once the family chooses cash, they are issued a barcode that can then be scanned by a cashier at a retailer and paid for in cash.
Not only does this translate to an immediate transaction record, it also allows organizations to move to a cashless environment while still adhering to their mission of financial inclusivity for all.
In other words, it’s a win-win scenario for service providers as well as their customers. Pay Theory solves a lot of reconciliation and other operational issues on the back end by providing one solution that will work for all processing needs. In tandem, our solution allows schools, for example, to still take care of cash-paying families, or anyone who’s unable to participate in normal banking systems, credit cards, or ACH transactions.
The Current State of Fintech and Inclusivity
Everything in the analog world, including payments, is moving towards a fully digital world. However, a large percentage of the population in the United States still either wants to, or needs to, use cash as a means of trade for transacting goods and services.
This creates friction for mission-driven organizations. For instance, while most vital organizations (think schools, hospitals, child care facilities, etc.) would love to go cashless, 30 percent of kids in U.S. public schools live in un- and under-banked households. Until now, they had to choose between forging ahead with technology, or risk leaving a third of their families behind.
Tech companies are typically obsessed with wanting to solve the future problem, but in solving for the future, they ignore the problems of today. It’s crucial to help people move along the pathway forward through technology that recognizes and addresses their unique needs, rather than leaving them behind. It’s Pay Theory’s mission.
We’ve always believed in our mission, and with nearly $2.5M from investors, this is a validation of what feels like a momentous time in the FinTech space.
Pay Theory’s Future Paves the Way for Broader Financial Inclusivity in Education, Healthcare
Essentially, this funding gives us the resources to build out the development team and the sales and marketing organization to ensure that Pay Theory is not just a solution that sits in a dark closet somewhere. In order for us to provide the best services and solve the larger problem that we’re going after, we need to be able to put a lot of great people towards solving that problem and getting it out into the marketplace.
Currently, our education partners have roughly 2.3 million students, serving three and a half million families. Our goal would be to get our services out to as many of those families as possible, as many of those school districts as possible, and continue to add to the population of schools that we have access to through our partner network.
Education, child care, and health care providers are incredibly interested in our services because it allows them to move forward in the future with the latest and greatest,
frictionless, secure payment offerings, but also takes care of their underbanked customers.
These mission-driven types of family-oriented service providers can’t afford to leave
anyone behind. Schools and hospitals are there to serve our communities. And you can’t really serve a community if you leave out a large chunk of your stakeholders. Pay Theory’s cash-to-digital technology solves so many of their problems both from an operational standpoint, as well as an inclusivity one.
Helping Schools Reduce Unpaid Fees
The next thing we’re building is an accounts receivable management tool, which is the beginning part of our ‘buy now, pay later’ suite of offerings.
For instance, healthcare and educational organizations often face problems collecting fees. In fact, most schools only collect 70–75 percent of the fees that they issue which can be a big drag on a school’s budget — and more often than not, it’s simply that a family doesn’t even know they owe money. Unpaid fees can have negative consequences for families and students — some schools won’t allow kids to graduate or receive their transcripts.
Pay Theory will provide a way for schools to systematically keep track of outstanding receivables that are usually recorded manually in Excel spreadsheets. Our tool will let them upload those spreadsheets into the Pay Theory system, and reach out to the families with outstanding debts, and allow them to create flexible payment plans.
What Does Pay Theory’s Cash Infusion Mean for Families?
Pay Theory’s mission is to allow families, or any consumer to pay when, where, and how they need to pay. This funding helps us get into the places where families are going for those every day ‘must pay’ needed services.
Secondly, it also allows us to go further and continue to add features and functionalities at the moment of payment. Like the innovative, ‘buy now, pay later’ types of services I mentioned earlier. Whether that’s around payment plans or lending types of services, we want to change the game and do it in a way that’s fair to everyone involved.
This puts us in a position to continue not only to take care of you right out the gate — the cash needs, the cash payment needs of families — but also then to continue to build services around that moment of payment that will continue to help families pay when, where and how they need to pay.
Current trends in the market, when it comes to diversity, equity, and inclusion, are pushing to address the needs of everyone in the system, but so far no one has been able to do this. Historically, efforts to build more inclusive equitable finance solutions have focused on serving the underserved exclusively. To us, that seems crazy! We believe — and I think that the data supports me here — that to truly include all equitably, we have to build financial solutions that deliver real value for everyone.
Lucky for us, investors like Zeal Capital also see that the need is there, but that the current solutions are lacking. Pay Theory is positioned to be that solution: one that not only future proofs payments, but current proofs too all while continuing needed services to all families, regardless of their economic status.
