No More Awkward “You Owe Me Money” Reminders: PayByGroup Lets Friends Split Group Purchases

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Following its participation in 500 Startups’ fall batch, a company called PayByGroup is now launching a beta version of its new service which, as the name implies, makes it easier for friends to split the payment on group purchases. This includes payments for things like concert tickets, vacation rentals, bachelor and bachelorette parties, or anything else where the cost needs to be shared between several people.

The service has a slightly different focus than some of the crowdfunding platforms that have sprung up as of late, like CrowdTilt for example (which the TechCrunch team used this summer). Unlike those services, PayByGroup isn’t about raising money for a cause with everybody throwing in what they can. Instead, it’s meant to streamline the still somewhat cumbersome process of getting a group of people together to purchase a big-ticket item, like a vacation rental. In in these scenarios, group organizers often have to play the role of the “bad guy,” awkwardly having to remind people to pay them back for the money they fronted, or wasting time trying to collect everyone’s share while the item – maybe awesome front-row tickets to a favorite band – gets sold out.

With PayByGroup, organizers step through a setup process that allows them to control how to split the cost (evenly or not) and it also allows the percentages to change based on how many people join. The platform uses a similar interface as Kickstarter does – that is, it displays a tracker on the screen that shows what percentage of the funding was met and how much money had been committed to date. When the funding goal is met, the organizer is notified and the credit cards provided by the participants are charged. The funds are then transferred into the organizer’s bank account within three to five days.

While this model will allow consumers to immediately take advantage of the service, the startup is also focused on building tools for merchants by offering a PayByGroup checkout button which could be integrated onto the merchant’s sites. This is where the company’s business model comes into play – on the standalone consumer-facing service, users aren’t charged. But with the checkout button, PayByGroup would take a percentage of the transaction. It would be great to see this option integrated into websites where splitting the payment between friends is often the norm. (Airbnb immediately comes to mind).

The company, based in Mountain View, was founded last spring by Camilo Acosta and Frank Langston, who both had previously built Root Orange, and CTO Dan Oblinger, who had worked at DARPA as a program director.

“We’re the group organizers in our social circles,” explains Acosta of how they got the idea for the service. “From the flag football team to the ski trips to the political fundraisers, we’re always the ones organizing our friends. We know how hard it is to get commitment from friends for anything so we ended up interviewing about 200 other organizers to distill the main problems and find a solution from the best practices they had figured out,” he added.

The company has funding from 500 Startups and various angels. PayByGroup will officially announce its public beta next week, but the service is live now.