Whether due to financial hardship or the logistical barriers presented by mail-, phone-, and web-based billing systems, customers sometimes miss or skip bill payments. According to a 2020 McKinsey report, nearly 40% of financial decision makers report having skipped or only partially paid a bill in June 2020. As of October 2021, the average debt per U.S. adult was $58,604, and 77% of American households have at least some type of holdover debt.

Disrupted bill payments present an obvious challenge for organizations, particularly those reliant on recurring monthly revenue to drive and boost profitability. That’s giving rise to services like Papaya, which aims to facilitate payments for businesses by integrating with partners’ billing processes through embedded widget technologies and paper statements.

AI-powered bill payments

Los Angeles, California-based Papaya was founded in 2016 by Jason Meltzer and Patrick Kann. Kann had experience in banking and stints at the World Bank and Idealab, while Meltzer worked at iRobot, where he led development for the computer vision technology behind the Roomba.

“Growing up in Brazil made me sensitive about my good fortune to receive a quality education, and I became passionate about giving back to the community and creating impactful businesses to help people,” Kann told VentureBeat via email. “When I moved to the U.S., I couldn’t believe how hard it was to send bill payments compared to Brazil, where every bill comes with a barcode and you can pay through a single, centralized online system. Finances is the number one cause of stress for U.S. families, and paying bills — especially paper bills — is a significant component of that stress.”

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Using Papaya’s mobile app, consumers can pay a bill by taking a photo of it, choosing a payment method, and sending it through the Papaya app. Papaya recognizes the bill using computer vision — whether a parking ticket, utility or phone bill, car payments, or insurance or medical invoice — and automatically routes payments to the appropriate party. In the event that Papaya isn’t able to find an online payment option, the company will mail a check on the consumer’s behalf.


“[W]e use computer vision and machine learning to turn pixels into text, evaluate image quality, extract relevant data, connect data to systems that can pay bills, and, crucially, evaluate the quality of the extraction and association to give fine-grained levels of confidence,” Kann explained. “Papaya has dozens of methods of payment execution, using AI to optimize fast and efficient delivery without resorting to mailing checks for the vast majority of payments. [We also use our] data internally to help us identify areas of growth and opportunities to provide new services to our users and expand to new partners.”

The Papaya app provides bill receipts and proofs of payment. Most payments are paid within a day, though processing times can vary based on payment method and biller procedures, the company says.

Preventing missed payments

Late payments are particularly problematic for small businesses, which often can’t afford to weather the shortfall for very long. A 2021 YouGov survey found that, due to late payments, over 30% of small businesses have delayed — or have considered delaying — hiring or purchasing inventory, or have cut employee hours. If they were paid more quickly, more than 58% of businesses would invest in growing their businesses or pay back loans and lines of credit more quickly, according to respondents to the survey.

In a separate 2019 report from Plum, small businesses said that 11% of their invoices weren’t paid on time and that 7.5% of all invoices ultimately have to be written off as bad debt. Among businesses that attempt to collect, they lose an average of 15 workdays each year trying to track down late payers.

“The payments landscape in the U.S. is completely fragmented, which leads to incredible friction in paying bills … The biggest competitor to Papaya is the status quo for how people pay paper bills,” Kann said. “When Papaya partners with a company that issues bills, we provide a frictionless way for their customers to pay. This increases collections, speed of collections, and customer satisfaction … Thanks to Papaya’s unique payment fulfillment technologies, we can issue payment directly to our partners with zero technical roadmap time on their end.”

Kann says that 80-employee Papaya, which raised $50 million in a series B funding round this week led by Bessemer Venture Partners, will soon expand its team to forge additional payment partnerships. Sequoia Capital, Acrew Capital, 01 Advisors, Mucker Capital, Fika Ventures, F-Prime, and Sound Ventures also participated in the round, which brings Papaya’s total capital raised to more than $65 million.

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