Cover launches in NYC to let you pay restaurant bills with your phone

The worst part of going to a restaurant is usually paying the bill, particularly when you’re in a group.

Cover launched a mobile payments app today that lets you enjoy your meal without having to wait for or worry about the check. It also announced it has closed a $1.5 million seed round of funding.

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The app has been in beta in New York City for about 10 months. Cover partners with local restaurants that integrate the software with their order/ payment system. In the front of the house, diners create or join “a table” in the app and tell the restaurant they are paying with Cover. The restaurant will split the bill and leave the tipping to you.

“Mobile payments is an enormous opportunity but hasn’t taken off in the U.S.,” cofounders Andrew Cove and Mark Egerman told VentureBeat. “Mobile payments products thus far haven’t provided a better experience than using a credit card. We are the first mobile payments product that improves the overall customer experience. We don’t just replace one form of payment with your phone — we completely eliminate the payment step altogether.”

Cover started out by only working with Michelin-starred restaurants. The founders said that many mobile payments products try to gain traction with bars and takeout restaurants, and they integrated a slew of “unnecessary” features like discounts, loyalty, ordering, and rating.

Cover’s approach is to target restaurants where customer service is paramount. Diners don’t have to deal with the awkward negotiation process of who pays what and tipping, and they don’t have to wait around for the check once the meal is over.

The founders said that it is an improved experience for restaurants too.

“Payments are a huge problem for restaurants — they create bookkeeping headaches, they distract servers from service, and they cost restaurants a lot of money,” they said. “Cover makes money by processing payments for less than what restaurants typically pay, and still makes a profit.”

Cover splits the bill evenly, which doesn’t help in scenarios where one person ordered an extra appetizer and another person didn’t have any of the wine.

I think this is the bigger pain point with restaurant payments, rather than the inconvenience of throwing down a few credit cards and waiting for the check. Still it is early days for Cover, and a feature that allows for different methods of splitting the bill could (should) be coming soon.

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Another potential challenge for Cover is getting enough restaurants signed up to make it valuable to consumers.

On-boarding restaurants is a time-consuming process, and these days there lots of tech companies trying to do it. OpenTable began testing a mobile payments system last month, and there are other startups including Square, TabbedOut, and LevelUp, not to mention mobile wallets and peer-to-peer payment options that also provide a payment alternative.

Before Cover, Egerman led mobile payments for the Consumer Financial Protection Bureau and Cove managed deal flow and community for AngelList. They have known each other since 2001 when they studied computer science at Carnegie Mellon University.

OATV, Lerer Ventures, Red Swan Ventures, AngelList founder Naval Ravikant, restauranteur John McDonald, James Altucher, founder of Venmo Andrew Cortina, and other angel investors participated in this round.

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The app is free and available on the App Store. An Android version is coming soon.