PayDivvy Inc. is trying to make bill-payment software more social and take on mainstream, bank-offered services in the process.
The Newport Beach, Calif., startup, which launched to the public Tuesday, is marketing an online service directly to consumers that allows them to aggregate and pay all their bills from one location as well as set up groups to track and split bills.
In a group scenario, users can send prompts to members who have yet to pay their share and adjust share amounts using a PayDivvy calculator.
Mike Melby, the founder and chief executive of PayDivvy, had the idea while he was living with roommates a few years ago.
"It was the typical disaster bill-pay scenario," Melby said in an interview last week. "We had our own bills that we had to worry about" as wells as eight shared bills, including rent, utilities, cable and cleaning services. "Just that alone was a broken process … still today people pay their bills through a half dozen websites."
PayDivvy, which was founded in March 2009, has been in an invite-only beta test since November. The company plans to open the service Wednesday to anyone who wants to join.
When users sign up, they can add a checking account and a credit card to fund transactions through their PayDivvy accounts. Melby said the company is planning to include the ability to use multiple accounts and cards.
Users can select from a pre-loaded list of more than 5,000 billers or manually enter billers into the system, Melby said. Users will receive electronic copies of bills through the site and can set up auto-payments. The service is free when paying bills with a checking account. It costs 3.5% of each transaction for card payments.
Edward R. Woods, a principal with the technology consulting firm Mindful Insights LLC, said PayDivvy could appeal to students or young professionals who live together, but it may have trouble gaining users on a wider scale, especially among consumers who already pay bills at a bank's site.
"It kind of assumes that you're in the network or that you're going to join the network," Woods said.
PayDivvy, which has raised about $1.5 million from investors, is considering offering the service to banks, which could pitch it to consumers, Melby said.
Consumer funds are held in Visa Inc.-backed, FDIC-insured accounts, Melby said. The company has relationships with First California Bank, a subsidiary of First California Financial Group Inc., in Westlake Village, Calif., and a payments processor that Melby would not name.