Paying a bill can be an exercise in bending time: It may take just seconds to make a payment, but the added and unpleasant task of deducting your earned income, tracking and verifying payment, can feel like an eternity, especially when faced with managing late payments. But San Francisco-based bill payment company Cushion is working to make the process of paying bills quick, easy and reliable, regardless of how complex one's personal finances are.
Cushion announced today that it raised $12 million in Series A financing to help expand the company's plans to evolve from its current operation as an automated bank and credit card fee negotiation firm to a one-stop, single resource to track, pay and finance bills to help customers avoid overdraft and late fees imposed by banks. The proceeds from the $12 million financings will go toward hiring talent across its products, engineering, data analytics and marketing as it prepares to take its bill pay solution -- which is in the beta-testing stages -- to the general public.
The Series A round is underwritten by Rose Park Advisors, the lead underwriter, along with Flourish Ventures, Vestigo Ventures, TSEF, Green Cow Venture Capital and CMFG Ventures Discovery Fund, according to Cushion's announcement.
A better way to pay
E-commerce has evolved by leaps and bounds over the past several years to a point where shopping online is the preferred means for many consumers. And why not? It's easy to make purchases with just a few clicks or taps, spurred on by retailers providing promotional online discounts or coupons at checkout. Newer payment options, such as Buy Now, Pay Later, make it easy to purchase goods without the inconvenience of having to pay for them now. But it all adds up. Consumers can be overwhelmed when it comes time to pay the bills, especially when their bill dates don't line up with payday. The result is consumers get slapped with late fees and overdraft fees, which in turn can affect their credit score.
"Consumers are struggling to pay their bills, and billers are struggling to get paid," says Paul Kesserwani, CEO and founder of Cushion. "We want to make sure that our customers can pay all of their bills on time without paying fees and to build credit all at once. We want to become the new payment rails for bills in this country, making money move faster and more efficiently," Kesserwani told ZDNet in an exclusive interview.
Kesserwani says he formed Cushion in reaction to seeing people suffer when managing their personal finances, as banks make money, charging them with late fees and overdrafts. "The biggest problem in consumer finance, in my eyes, is the consumer who's not financially savvy, but who makes emotionally charged decisions and has new [online financial] tools being thrown at them every day. They're trying these products -- some are good, some aren't." So, Kesserwani formed Cushion, which acts as a layer of protection between the consumer and their bank, helping them manage their daily finances and making sure their bills are paid on time, avoiding late fees and overdrafts, so they can go on and live their lives.
How it works
Kesserwani says the big challenge with bill pay apps is onboarding, where users manually enter in all their bills and banking information. "Most bill pay apps first ask users to enter all of their bills, and for many, that's already a deal-breaker," he says. With Cushion's proposed bill pay center, customers can connect their banks and credit cards – as they would with any fintech app – but its machine learning models can then identify all the recurring bills of the user, including rents and subscriptions. "With our fee negotiation product, we've racked up about a billion transactions, so we have a ton of data going into this product to train our models," Kesserwani says, adding that Cushion's bill pay system can not only find all of a customer's bills but can determine what has been paid, what needs to be paid, what's overdue and what's at risk of being late.
Once logged in to the bill pay center, the user can see all the bills that Cushion's machine learning model has detected and entered; any bills Cushion missed can be added manually by the user. From there, Cushion issues a line of credit to the user -- currently up to $300 -- which can be used to pay some of their bills using a virtual debit card issued to them. All the consumer needs to do is place that virtual debit card on file with a biller, and they're all set. "We're essentially covering the bill for the consumer, and that allows them to make sure it's paid on time -- they're not incurring fees -- and when they pay us back, we report those payments to the credit bureaus. So now you're building credit even if you're not using a credit card. If you bring that all together, you can now manage, pay, and finance your bills while avoiding bank feeds and building credit," Kesserwani says.
Cushion's plan to launch its bill pay feature comes when high inflation is affecting consumer spending and budgeting, especially how consumers can pay for their purchases. True to its name, Cushion hopes its upcoming bill pay solution will soften, or eliminate, the blows consumers have had to endure with bank and overdraft fees. Doing so requires the $12 million Series A financing.
Kesserwani notes that the new bill pay offering is "eagerly awaited" by Cushion's 100,000-plus customers, with an additional 150,000 people placed on a waitlist.