BillFloat Helps You Put Off Paying Your Bills — for a Fee

BillFloat, a San Francisco–based startup that wants to pay your bills and give you more time to come up with a payment, launched its services officially today (the site soft launched last week). The company also announced a $4.5 million Series A round of funding from First Round Capital, with participation from Venrock and PayPal (s ebay). The venture fund and the payment company provided seed capital for the company, which was founded last year by Ryan Gilbert and Sean O’Malley, both of whom were entrepreneurs in residence at Venrock when they came up with the idea.

Earlier this year, PayPal said that it provided seed funding as part of its ongoing attempts to expand the online payments market, but it still wasn’t clear what BillFloat was exactly. Gilbert said that he and O’Malley had been thinking of a number of different services and features that would change the way consumers and businesses engage in online transactions and were going to experiment and launch them over time. It’s not clear whether the BillFloat site that just launched is the first in this series of services.

The idea behind BillFloat is a simple one: in a sense, the company acts like a big brother and pays your bills if you can’t come up with a payment by the deadline (the service has more than 3,000 U.S. billers in its database, from phone and cable companies to insurance providers). You then get up to 30 days to pay BillFloat the invoiced amount plus a handling fee. Since many retailers and service providers charge substantial penalties if you miss a payment, BillFloat hopes to save users that pain and still make enough from its fees, which it says are smaller than the majority of those penalties (they start at $4.99 per bill).

One interesting element of the service is that BillFloat doesn’t do any kind of credit check on users before it agrees to pay their bills — the company says that it has a “decisioning engine” that determines to whom it should extend its micro-credit that makes a standard credit check unnecessary. One of PayPal’s claims to fame is a similar algorithm and software system that the company says can determine from a range of factors, including a search of various web databases and online activity, whether a person is a good credit risk or not. PayPal likes to say that it knows whether it will accept you as a customer before you have even finished filling out the initial signup form.

BillFloat is similar in some ways to another PayPal-related service called BillMeLater, which eBay acquired in 2008. The service allows consumers to pay for a variety of goods and services with what amounts to a digital IOU, requiring them to provide only their date of birth and the last four digits of their Social Security number.

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