Pay By Group strives to remove the friction consumers encounter when splitting payments with friends and family.

For instance, if no one in a group of travelers wants to put a $650 deposit toward the trip on their credit card and wait for others to pay them back, they can use Pay By Group instead.

Removing this barrier for parties of two or more yields 268.7% higher conversion rates on the 20% of online bookings that comprise this market segment, the startup says.

Today Pay By Group reveals that it has received a seed funding round of $3.4 million, led by SparkLabs Global Ventures.

Also participating in the round were venture firms Great Oaks Capital, 500 Startups, Payment Ventures, Amino Capital, and Kima Ventures.

The Silicon Valley startup was created five years ago by Camilo Acosta and Frank Langston, Princeton University roommates. It now has 20 full-time paid staff.

The founders have made a one-minute pitch video:

Travel is Pay By Group’s main target market, though retail and gift registries are also seen as sectors. It primarily appears as a checkout button on merchant sites, but it’s also available for consumer use at PayByGroup.com

Its white-label suite of group conversion solutions aims to do three things for its clients: differentiate their business, convert these users, and multiply their customer relationship management (CRM) growth and loyalty enrollment. The tools plug into existing sites and deliver a claimed 2.98 net new customers per booking among current clients.

Tnooz asked CEO Camilo Acosta a couple of questions about their company:

What’s your revenue model?

We use a fixed-price, software-as-a-service (SaaS) model to bill our business clients, from enterprise customers to tour operators and independent hotels/resorts. However, the bulk of our revenue comes from consumer transaction fees.

We make it free for the organizer and charge the other group members ~2.9% up to a maximum of $25. We also give merchants the option to absorb the consumer transaction fee, and many of them choose to do so.

Why do you think the pain point you’re solving is painful enough that customers are willing to pay for your solution?

Conversion, conversion, conversion. For every one of our clients at least 10%, and up to 25%, of their online bookings choose the Pay By Group option. When the Pay By Group option is presented on a property or product details page alongside a traditional checkout flow, Pay By Group converts users at a 268.7% higher rate.

We’ve spent five years optimizing our system to drive an enormous lift in conversions for what is a highly lucrative yet notoriously difficult segment of customers to convert.

Today, merchants often handle the process manually, if they even offer a solution at all, spending hours taking payments by phone for a single booking and reconciling them on the back end.

Consumers are most often left to fend for themselves and fail to complete a booking when they get frustrated and throw in the towel.

With a median of 4 participants per booking, Pay By Group adds 2.98 new users to our clients’ CRM’s per completed booking. That user acquisition otherwise costs merchants $44.70 at $15 per new user.

What’s a travel illustration of how the problem your startup addresses plays out on a typical day with typical people?

Over Christmas dinner, Laura and her family – she and her husband, her parents, and her two siblings and their spouses – decide to take a family trip to Costa Rica over the summer. Laura dives into researching a few days later and finds a perfect resort on the water with connecting rooms available.

Let’s say she’s tempted to book until she feels that twinge in her stomach telling her “not so fast” because she isn’t sure if the rest of her family is really in, so she bounces from the site.

Over the next few weeks, she casually brings it up with her family members but never gets comfortable that they’re fully committed, and ends up spending her summer vacation at the lake with just her husband.

Rewind to the moment before Laura bounced, and now she sees the Pay By Group-powered option to “Book with Friends & Family.” She clicks it, enters her family members’ emails, and heads back to work. Pay By Group convinces everyone to join by assuring them they will only be charged if the other parties join as well.

About a day later, Laura gets an alert that everyone has committed (thanks to Pay By Group’s efforts), and she can confirm the booking while the inventory is still available (note: it was not held in the meantime).

The resort secures a 4-room, $6,100 booking it would have otherwise lost, and Laura spends the next six months excited about her trip and telling all her friends how great it’s going to be.

In today’s best-case scenario, Laura spends two weeks following up with her family members, and the resort crosses its fingers she returns to book with them instead of a competitor.

Merchants capture the conversion lift and CRM growth with a de minimis investment, and the only alternative is to build it themselves, which will easily take 18+ months, millions of dollars, and still leave them short of the conversion rates we’ve reached and likely not solve for the innumerable edge cases that surface when fitting multi-party payments into single-payer architectures.

Besides the funding, what’s some external validation that shows you’re on a promising track?

We have more than 300 business clients, we’ve recently run a very successful pilot with HomeAway, we’ve partnered with HomeAway Software, Barefoot Software, and Streamline Software. We were also voted a Top 3 Most Innovative Company at Travel Technology Europe.

Acosta, the CEO, was a Phocuswright Young Leader in 2015 and Langston, the CRO, has been chosen as a Phocuswright Young Leader for 2016. Langston has also been a speaker at VRMA and RezFest conferences as an expert on payments, Millennial-targeting strategies, and online-booking conversion.

Pay By Group also participated in the 500 Startups accelerator, as well as CommerceInnovated, the joint MasterCard and Silicon Valley Bank accelerator.