BillGuard, on the other hand, believes it found a solution to this issue by focusing not on budgeting, but instead on security and on saving money. The two-year old company uses big data analysis, combining anonymized insights from across its hundreds of thousands of users, to identify potentially fraudulent or otherwise unwanted transactions in a user’s bank and credit card financial statements. Founder and CEO Yaron Samid calls it a crowdsourced, algorithmic approach to saving consumers money. The end result is peace of mind and savings, two things that have, thus far, proven to drive user engagement.
BillGuard has identified over $50 million in “grey charges” in its users’ accounts, meaning deceptive, erroneous, and unauthorized credit and debit card charges. More than 1.5 million such transactions were identified in October alone. The opportunity to discover and act on these items leads the average BillGuard active user to open the app four times per week according to Samid, an engagement rate which he claims handily best industry averages, although he declined to share those industry rates citing the confidentiality of his competitor’s performance data. Samid added that BillGuard’s 90-day user retention rate similarly outperforms his industry peers. Unfortunately, without competitor data available, the best we can do is take his word for it.
For most of the last two years, BillGuard has been a Web only product, but the company released an MVP version of its iPhone app three months ago and saw most KPIs increase fivefold, according to the CEO. The app has a 5-star rating in the iTunes App Store and has grown to 250,000 registered users over the last three months, a figure which is growing by more than 3,000 users per day, Samid says. The app is currently ranked No. 1 in the Money Management and Finance Essentials categories in the iOS App Store, positions which not too long ago belonged to Mint.
Today, the company is releasing a significant upgrade to this app, adding more spending visualization tools doubling down on the existing savings value proposition. (BillGuard for Android is expected in Q1.)
“If you pay full price for an item where a discount is available, we consider that a data inefficiency,” Samid says. The CEO went on to describe the update as “what Mint should be today, and where the company was headed had it not been acquired by Intuit.”
BillGuard isn’t adding a standard coupon dashboard, daily deals marketplace, or anything else similarly trivial. Rather, the company is returning to its big data roots and analyzing a consumer’s historical spending habits for clues into where they could save money. For example, if a consumer regularly shops at Amazon, Staples, Starbucks or other mass retailers, the app will surface coupons. In most cases the company receives no compensation for coupon distribution or redemptions, but in a minority of cases it will collect a nominal fee, Samid says.
The key to delivering value under this model is to maintain a sufficiently high bar in terms of suitability, something BillGuard’s founder readily acknowledges.
“This is not an inbox with a bunch of deals, it’s an alerting system triggered when we identify something about your behavior,” Samid says. “We think of it as a shopping protection service where we help prevent you from paying too much. The most important thing is that it learns from your behavior and adapts over time based both on where you shop and which discounts you redeem and which you ignore.”
The major difference between the current generation of financial tools, BillGuard included, and the first-generation of products like Mint, is delivering actionable information. Alerting users to instances where unwanted transactions appear on their account or where savings are available for products they intend to buy adds real value, and thus drives habit formation.
“The first generation [of personal financial management tools] was all about beauty, the next generation is about beauty and brains,” Samid says.
BillGuard supports more than 5,000 credit card and debit card accounts including Chase, Bank of America, Citibank, Wells Fargo, HSBC, Capital One, BB&T, SunTrust, American Express, Discover, and PayPal. The app is free for use with up to two cards, while a third card can be unlocked through a simple social sharing action. BillGuard Premium is available as a one-time, $10 in-app upgrade and allows the user to add as many as 10 cards. Starting today, and running through Saturday (November 30) the company is giving all users free BillGuard Premium for life.
Premium upgrades is not the company’s long-term business model. Rather, once BillGuard reaches critical mass in terms of users and transaction data, the company plans to monetize around “ensuring trusted commerce,” according to Samid. He’s keeping details of the business model close to the vest, but one might envision a paid “BillGuard Trusted Seller” certification, akin to the way Energy Star certifies appliances and trade associations certify organic produce. BillGuard would naturally charge merchants for such certifications.
BillGuard takes a number of steps to ensure security of consumer data and their personal accounts. First, the company requires that users set a four-digit pin for their BillGuard account and encrypt all communication. Second, it only requires read-only access to card activity, meaning that neither the company nor the user can move money through BillGuard.
The company has also developed deep expertise in parsing otherwise messy financial transaction data, and has been issued three patents for doing just that. “It’s a clunky process at first, but once you do it at scale, you start seeing patterns, grouping cohorts based on spending behavior, and deliver actionable advice on what to do to save money,” Samid says.
BillGuard has raised a total of $13 million to date, with the most recent financing being a $10 million Series B round closed in October 2011. The company’s backers include Bessemer Venture Partners, Innovation Endeavors, Bessemer Venture Partners, IA Ventures, Founders Fund*, Khosla Ventures, SV Angel, and Social Leverage, as well as numerous angels. The company has plenty of runway left, Samid says, but with growth already accelerating dramatically since the launch of the company’s generation one mobile product, he expects to seek out additional capital in mid-2014. The hope is that today’s upgrade will broaden the app’s appeal and bump up that timeline even sooner.
“Personal financial management is inherently very personal, and is dependent on human behavior,” Samid says. “The way I manage my money is very different from the way you manage your money. There’s real pent-up demand for tools to simplify personal finance management.”
By combining security and saving, BillGuard is able to appeal to an even larger and more diverse audience of consumers. And by starting with security and expand into savings, the company has been able to establish itself as credible and trustworthy, something that is hard to come by in the consumer discounting space.
“We were able to use security as wedge, which enables us to do smart savings without it feeling like advertising,” Samid says. “We’ve developed a trust-based relationship with our users that they know we’re using data to save them money.”
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Kathy Yakal's PC Mag BillGuard Reivew:
- PROSEasy connection to credit card issuers. Provides details about transactions. Uses crowdsourcing to flag often-reported merchants. Automated contact with financial institutions.
- CONSCan't pop back to the dashboard with one click.
- BOTTOM LINEBillGuard connects you to your online credit card statements and flags merchants who frequently charge consumers for products or services they've either forgotten about or they didn't know they were requesting.
If everyone went over their credit card statements with a fine-tooth comb and reported any questionable or unwanted charges immediately, there wouldn't be as much need for an iPhone app like BillGuard.
But not everyone does. I know I don't. And sometimes when I do, I notice that I've been billed for something every month that I never wanted to be a recurring charge. I have to track down the merchants and call or email them to cancel. If that doesn't work or I can't find any contact information for the source of the charge, I have to contact my credit card company and ask to have any new charges refused.
Even then, I'm out several months of fees that shouldn't have shown up on my bill.
BillGuard, described by its developer as a "crowdsourced transaction intelligence network," is a smart, useful, innovative iPhone app that's simple—almost fun—to set up and use. It displays your credit card charges as they occur, flagging any that have been frequently reported by members of its network as questionable or unauthorized. You can either confirm that those charges are OK or ask BillGuard, via a simple automated reporting system, to contact the merchant on your behalf.
That's all it does. But used conscientiously, it can help you nip those pesky unwanted charges in the bud—and save you some money and aggravation.
Grey ChargesBillGuard doesn't promote itself as an identity theft-prevention tool, but it can work like one if you check it regularly. Rather, its mission is to help you avoid "grey charges," unwanted hits on your credit cards. Maybe you signed up for something and forgot about it. Or maybe the merchant used misleading, deceptive language or hid a recurring charge in fine print that you'd be unlikely to see. BillGuard claims that U.S. cardholders spend $14.3 billion in grey charges annually. So it's a good idea to keep an eye out.
A Familiar RoutineThis is the second smartphone app I've noticed that asks not only for a user name and password, but also a "passcode," four numbers you'll use for sign-in, like your ATM PIN. Once you've signed in (assuming you don't actually log out, just return to the iPhone's home screen), you only have to enter those four numbers to get back in instead of your sometimes-unwieldy login credentials. I like this.
Setup works the same way any application that connects you to a financial institution works. You select your card issuer from the list supplied or search for it if it doesn't appear there. Enter the user name and password you use to access your account online, and BillGuard takes a few minutes to set up the connection, showing you a helpful instructional video while you're waiting. You can add up to two cards for free, but after that, you'll pay a one-time fee of $9.99 to add up to 10.
BillGuard's dashboard, its home page, displays a small window and four navigational buttons. Your total credit card debt incurred so far in the current month appears in the window. You can click on the four icons provided to see four different groups of credit card transactions: Priority (transactions from merchants that the "crowd" has reported as a potential problem); Recent (your newest charges); Recurring (and this is where the problem often occurs: periodic—usually monthly—charges that you may or may not want); and All transactions.
(An unnecessary but nice touch: When the "You're All Clear" message appears, you can click an icon to have the inspirational quote displayed sent to Facebook, Twitter or a personal text. There's no white noise in BillGuard.)
Help with TransactionsBillGuard makes good use of the iPhone's navigational tools, though you can't always return to the dashboard with a single click. On the home page, there are icons in the upper right and left corners. One opens your utilities menu, and the other lets you add another card. As you move deeper into the app, you'll use navigational buttons like "Back" and "Cancel" to reverse directions.
You can do one of two things when you're viewing a list of transactions. Tapping on it provides additional details about the merchant and transaction, and gives you "OK" and "Follow Up" buttons. Clicking "OK" turns the transaction green in your list, and "Follow-Up" opens another small window of options. If you click the "Help Me Recognize This" button, BillGuard provides links that let you ask a friend about it on email or via text; the third opens a Google search.
Or you can swipe the transaction entry right to mark it as being approved by you. Swiping it left adds a "Report/Contact Merchant" button. Clicking on it opens the "Report Charge" window, where you can select your problem from a list that includes "Stolen Card," "Forgotten Charge," and "Hidden Fee." You'll be able to enter text expanding on that, and then you have to authorize BillGuard to contact the merchant for you.
A Simple, Friendly SolutionPersonal finance management applications are just getting started when they connect to your financial institution and download transactions. They have many other features. BillGuard is much less complex. It's smart in more than one way, though. First, it draws on the experience of other consumers to let you know when what you're experiencing with a particular merchant is widespread.
And second, it's smart because it has isolated one element of personal finance that can get lost in the noise of more robust applications. It provides a quick and easy solution to one clearly-defined problem–Grey Charges. Which are you more likely to do: pore over your printed or downloaded credit card statement, or pull out your iPhone and spend a minute or two with a cool app?
If another company is providing this kind of service as well or better than BillGuard, I'm not aware of it. But I do know BillGuard is one personal finance app I'm going leave on my iPhone long after I've finished testing it.
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