Cincinnati fintech Pay Theory receives $2 million in seed investment

Pay Theory, a Cincinnati-based startup and premier payments platform on a mission to break down barriers between families and their most vital service providers through simple, beautiful, and inclusive financial solutions, has closed a round of $2 million seed funding led by Zeal Capital Partners, a Washington, DC-based venture capital firm known for its commitment to inclusive investing.

The investment – which brings Pay Theory’s total funding to $2.5 million – will go towards product development and talent acquisition for roles in sales, finance and software development and enable it to focus on growing its relationships with Family Tech SaaS vendors and service providers.

Other new investors in the round include SixThirty, Ohio Impact Fund, Gaingels and Sica Ventures. Pay Theory has also received follow-on investments from Double Eagle Venture Partners, LOUD Capital and a number of their existing angel investors.

“This is a major step forward for Pay Theory. This represents validation of our approach to inclusive finance in the industries where it matters most to families,” said Brad Hoeweler, CEO of Pay Theory. “Zeal, SixThirty and the rest of our investor group bring deep experience in payments and fintech to us. Their investment in spearheading this seed demonstrates their commitment to our innovation in this fast-growing and ever-changing space.

“Pay Theory provides a new opportunity for fintech to leverage its power to bridge the financial divide for families and communities that have historically been ignored and underserved in the financial services industry,” says Nasir Qadree, Founder and Managing Partner of Zeal Capital. “The potential to become a market leader – the impact and the magnitude of that impact – is aligned with Zeal’s mission to drive greater economic mobility across the United States by closing the financial gap for people unbanked and underbanked.We are excited to help propel their journey.

Pay Theory was founded on the idea of ​​creating a better payment solution for K12 schools, which is always an area of ​​focus for the company, but in learning how to help schools, they ran into this important question : what are you doing to create equitable and inclusive schools? access for all students and their families?

Approximately 30% of K12 public school families in the United States are unbanked or underbanked, excluded from traditional financing systems, and forced to rely on physical cash and alternative financing to keep household finances running.

More than half of Americans live paycheck to paycheck, and nearly a quarter are unbanked or underbanked, making it difficult to make payments on time. especially when the bills can be lumpy, like the start of a school year or an unexpected health situation. These challenges have only been exacerbated by COVID19, as transactions have moved online and families have lost their jobs and been prevented from making payments in person.

With its industry-leading platform, Pay Theory enables SaaS providers to deliver must-have services, such as K12 schools, child care providers, health services, and sports and activity organizations for children, to adopt and implement technology that provides better customer experiences, all at the same time. time ensuring inclusiveness for all families, regardless of their access to a checking account or credit card.

Pay Theory does this by giving families the ability to pay for an online shopping transaction with physical cash using a network of nearly 60,000 retailers nationwide – and growing – including Dollar General, CVS, 7- Eleven, Walgreens and Walmart. A bill or fee of any kind may be issued to a family that chooses to pay cash through a Pay Theory partner. Once the family chooses cash, they receive a barcode, either virtually on a smartphone or via email, which can then be scanned by a cashier at a retailer and paid in cash. This allows service providers to be virtually cashless while providing a financially inclusive payment option for parents.

“Fintech can be the biggest enabler of inclusive finance in the world because it’s not constrained by legacy systems or relationships,” says Hoeweler. “The challenge, especially for part of the economy, is to build financial systems that serve everyone fairly. In doing so, technology can truly make the world a better place.

Pay Theory’s simplified payment architecture integrates with SaaS platforms that “mandatory” service providers, like schools or medical practices, already use. These platforms process payments from a parent to a service provider’s account through a credit or debit card transaction, electronic check or barcode for cash payments. . “We also see broader financial services applications for this unique architecture in banks and credit unions,” said Eric Fulkert, president and CTO of Pay Theory.

Future plans for Pay Theory include an “Access Now, Pay Later” solution for its verticals, bespoke credit issuance and credit scoring. These solutions, along with family-specific rewards, will help SaaS platforms empower families to make the payments to service providers that will shape the future of their children.

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