How Splitwise Makes Money

Splitwise is a free app that allows consumers to split expenses with friends. If a group needs to share the cost of a particular bill, Splitwise ensures that anyone who pays is reimbursed the correct amount and with a minimal number of transactions. Splitwise, users can send an email notification when a bill is due, and the app allows users to send an IOU to someone else in the group.

The app is marketed to keep track of informal debts, including the cost of rent, dining and travel expenses, bills, and more. Users of Splitwise enter notes into the app about who they owe, who owes them, and why. This service eliminates the need to keep receipts because a user can add any expense to the app when the cost is incurred.

While Splitwise doesn't make cash transactions, it is strictly a digital IOU app, users can make payments via online payment services like Paypal and Venmo. The service charges a fee for specific debit card and credit card transactions.

Splitwise Pro is a paid upgrade (approximately $3 a month) to existing Splitwise accounts, available for a variable monthly or annual rate depending upon when the account was established, the country, local taxes and regulations, and more. Pro users see reduced advertisements, a receipt scanning and itemization service, currency conversion, expense search, early access to new features, and more.

Splitwise's Industry

Splitwise is used via a mobile app and web platform that uses Fintech software. This thriving industry offers users technology to help them enhance or automate financial transactions.

A bill-splitting app, it operates in the same realm as its competitors like Tab, Settle Up, and Splid, which all offer similar services that provide easy ways to split up bills and pay debts within groups. Splitwise, when used in conjunction with Venmo or Paypal, allows users to jettison paper money in favor of digital transactions.

The global fintech industry has a long reach. According to the most recent research, like EY's 2019 Fintech Adoption Index, 64% of consumers have adopted a form of fintech into their lives.

Fundraising and Financials

Public data regarding the company's user base is unavailable. Still, Splitwise has generated more than $30 million in investor funding over five rounds since its founding in 2011, suggesting outside interest in supporting the company's growth. In the last round of funding in April 2021, according to Crunchbase, the company has raised a total of $20 million.

Splitwise may receive a portion of transaction fees paid by the user to facilitate payment transfers via PayPal or debit and credit cards. Still, it isn't easy to assess just how significant this source of revenue may be for the company, or even if it can be considered a major revenue stream, as Splitwise does not have publicly available financial reports. Nonetheless, because the transactions do not occur within the app itself, Splitwise can keep its service free to the user—even if payments themselves incur separate fees to settle up debts owed.

The cloud-based Splitwise app is available for iPhones, Android devices, and computers. Because Splitwise is a free app for users, the firm does not generate revenue from its user base. Splitwise primarily makes money through occasional advertisements and through its paid subscription upgrade service, called Splitwise Pro.

Although company documentation suggests that users of Splitwise's free service may experience advertisements, in reality, ads seem to appear sparingly, if at all. Because the company does not provide public financials, it is difficult to assess if Splitwise earns significant revenue from advertisements and, if so, what these figures may be.

Splitwise History

The Providence, Rhode Island-based company was founded by Jonathan Bittner, Marshall Weir, and Ryan Laughlin, who handles the web design and development, in 2011. According to his bio, Bittner, a former astrophysics graduate student at Harvard, was interested in creating an app to assist quantitative fairness.

The company aims to provide "mediation advice on fairness," While the backstory isn't on the website, users can search through the archives of the company's blog posts back to 2011 to understand how they operate and create. As a free app, Splitwise does not charge users to download or utilize its basic service and offers a service called Splitwise Pro for approximately $3 a month.

In 2019, the company refreshed and redesigned its entire platform, including the homepage, logo, and mobile app.

Recent Developments

 In April 2021, Splitwise Inc announced they had raised $20 million in Series A funding led by global venture capital and private equity firm Insight Partners. According to a company-approved press release, Splitwise will "use the funding to grow its team, accelerate global customer growth, and create new partnerships with fintech and financial services platforms."

Since its inception, $90 billion in total transactions had been split on the Splitwise platform, and in April 2021, Splitwise launched a significant refresh of its Android app.

The Bottom Line

The new round of funding for Splitwise indicates a continued demand by consumers for fintech applications. Splitwise does not provide exact metrics on its active users, but the company appears poised to grow, and an app that helps groups of friends and family keep track of money owed, most likely will continue to be in demand.