At a time when fintech companies and banks are struggling to draw more consumer interest in their apps, a Reno, Nev., startup is hoping to motivate underbanked consumers to pay bills, including overdue ones, via a friendly mobile experience.

The collections process, normally associated with angry calls and limited payment options, seems ripe for an upgrade in the smartphone era.

"We need a fresh approach to collecting money," said Max Haynes, founder and chief executive of Customer Engagement Technologies.

So the company's new app, called PaySwag, is designed for auto lenders, banks and other businesses as a stand-alone, private-label product or for integration into their existing technologies at a time when regulators are scrutinizing debt collection practices more than ever.

The app is designed to be used by higher-risk borrowers who are current on payments, in addition to individuals who may need to negotiate a payment plan because of unusual circumstances such as a job loss or a slightly delinquent account. Similarly, a few years ago BBVA Compass launched an online portal that lets borrowers negotiate collection terms.

PaySwag is trying to make collections more positive and proactive through numerous methods including gaming techniques, bill payment reminders and online negotiation tools. But one of the most novel features of PaySwag, which was launched at Finovate in September, is its rewards program: consumers who pay their bills and watch educational videos will earn points that can be redeemed for, say, a Starbucks latte.

Other financial institutions have been rolling out reward programs for the underbanked. In recent months, check-cashing shops have been stepping up their loyalty and rewards program to drum up more business. American Express's prepaid card, Serve, was updated in August to let customers earn cash back.

And debt collectors have long being known to make individual deals, such as reductions in the size of monthly payments, with consumers who owe something, according to a collections trade association.

"Debt collection professionals are trained to work with consumers to resolve issues, and that could include anything from offering an incentive or a reward, to negotiating a reduced payment or a payment plan," said an ACA International spokeswoman.

But a mobile app that includes rewards and gaming techniques is potentially controversial. Haynes readily says he gets questions like: "Why should people get rewarded for catching up on their debts?" But he says he's not here to judge.

"My goal is to find a better way to settle their obligations," Haynes said.

Brian Riley, a principal executive advisor at CEB TowerGroup, believes it is an interesting idea that requires more investigation. He would want to see what kinds of rewards are available through PaySwag and monitor whether they resonate with underbanked consumers, and if so, if it drives them to pay up.

"These kinds of things need to be tested," said Riley. "You never know what you will learn."

And rewards are but one way the PaySwag app tries to inspire people to pay their past dues. Others include push-notification bill reminders, the ability to pay through a variety of methods including cash, and online negotiation tools. Rather than call an 800 number, a consumer can fire up the app to request a payment plan. After telling the app why (think losing a job, or unexpected car-repair costs), the software crunches the data within parameters set by the creditor-partner to determine what can be offered.

Consumers can also pay by ACH, credit card or debit card.And for those who prefer to pay in cash, PaySwag integrates with PayNearMe so consumers can pay their bills at participating retailer locations.

Through these features, Haynes hopes his tech helps consumers avoid negative outcomes like harshly written collection letters and credit score dings, and save time.

Of course, there will always be consumers who cannot afford to pay something and others who choose not to. But the digital offering may appeal to people who could feel apprehensive about haggling with creditors on the phone or in person because, say, their children got sick.

"It's a personal thing to have to talk about to a stranger," said Dave Yohe, who does corporate marketing for BillingTree, a company that sells a negotiation tool. "It seems a little less daunting to talk to a system."

It also lets consumers settle up when they wish — including at 2 a.m. — while regulations restrict the times collectors could call.

Still, the goal for PaySwag is a big one given its target demographic, whose members might be choosing which bill not to pay in order to afford groceries for the family that week.

But Haynes believes there is a big enough market. Plus, he intends to stay away from debts more than 90 days old — it is hard to create a positive experience for someone who has already received harsh dunning letters.

To be sure, the app is in the very early stages and it needs to continue to test its premise. But early results bode well: a subprime lending company used the app for 12 months and was able to recoup $3.5 million through more than 12,000 individual cash transactions made at retailers through PaySwag.

Now, Haynes hopes to also apply the technology in financial institutions, health care and government collections.

"There's a huge need beyond automotive lending," said Haynes.