Online bill pay service Billeo has announced a $7 million Series B round of funding. ATA Ventures led the financing, with additional contributions from all of Billeo’s existing investors including Altos Ventures, Claremont Creek and Pacifica Fund.

There have been a lot of startups focused on enhancing your online personal finance, mostly around analyzing your investments (Cake, Zecco, Covestor) or expenditures (Mint, Wesabe). By contrast, Billeo functions as a straight forward tool for automating or remembering to pay your bills online.

You tell Billeo what bills you want to pay automatically or be reminded to pay and their service sends reminders and tracks you payment history online. Although a lot of banks offer online bill payment to third parties, Billeo also tracks your payment stats and compares them to the crowd. If you download the toolbar we previously covered, Billeo will also automatically fill out a lot of financial forms for you online. However, while other financial management tools haven’t incorporated online bill payment, it seems a clear feature addition that will compete with Billeo in the future.

We were pretty hard on Zecco when it launched a little more than a year ago. Their zero commission brokerage service raised a number of red flags. In particular, we were worried that they would attract only the very low end of the market.

Despite our criticism, the company soldiered on. They’ve built out their trading platform to to get the heavy day traders to use them, and launched a social site called Zeccoshare that allow like-minded investors to share opinions on stocks (which in turn drives transactions). They say they’ll soon begin to harness the collective intelligence of those users to get even more data about stock to traders. There are others experimenting in this space as well.

Today the company is announcing a $25 million round of financing, adding to the $10 million they previously raised. They’re also filling out their executive team quite nicely. Who knows, maybe, just this once, we were wrong when we called them a loser.

We’ll just put Etrade into the deadpool instead.

We wrote about a distilled version of the Wisdom of the Crowds idea a couple of weeks ago when profiling PicksPal, a fantasy sports betting site. PicksPal’s new product takes the best fantasy sports pickers and (without them knowing) repackages their advice as a paid service to sports gamblers. It’s done remarkably well after the first couple of weeks. The idea is that if you can take the true experts from the crowd and average their opinions, you can get to really stunning results.

Now we have a second recent experiment in this area, the launch of Motley Fool CAPS. The service joins a host of others (such as SocialPicks) seeking to forecast markets. CAPS lets users place predictions on a publicly listed stock’s performance vs. the S&P 500 over a given time frame. After 7 such predictions a new user is given a CAPS percentile ranking that takes into account their overall return and accuracy (correct predictions / total predictions).

Users join the service for the bragging rights that come with being number one on the leader board and the various award icons adorning their profile. But CAPS is also using that data to create buy/sell recommendations on stocks. Users with a higher rating affect a stock’s recommendation far more that users with low ratings. So its like Wisdom of the Crowds, but with a weighted average towards proven winners.

Markets have traditionally been seen as the most efficient way to value information (even for the ill-fated DARPA terror futures market). But for investors looking for an edge, CAPS may give them the information they need.

A problem, though, is that unllke PicksPal, “experts” on CAPS, which are those users with very high ratings, know that they are affecting stock recommendations. The simple fact that they have this knowledge may affect how they pick stocks, and disrupt the entire system (one of the basic ideas behind the original crowds v. experts analysis in Wisdom of the Crowds). If and when that happens, CAPS may be little more than a way to push stocks that “experts” have a financial interest in, or for other non-efficient reasons.

There are rumors that the new free stock brokerage Zecco is going to offer a similar service. If Zecco customers don’t know that they are part of the user group being used to make predictions, their results may be much better over the long run.

Note: The following post was written by regular contributor Neil Kjeldsen. It’s worth noting that Neil worked for nine years in the brokerage industry, most recently managing the schwab.com website and online brokerage product. He is no longer with Schwab or affiliated with any other broker.

Yesterday’s announcement by Zecco and their $0 commission trading platform generated a lot of buzz within the tech community. It’s an interesting play at an interesting time given the instability in the world, which isn’t typically market friendly, but I think it will be a long time before Zecco or any other upstart has an impact on the big brokerages. Here are several reasons why:

1. Most people don’t trade that much, thus commissions only matter to a small percentage of consumers. There are some who trade very actively and generate significant commissions for brokerages, but the average account trades only a few times per year. For that reason, it’ll take the kind of bull market you see once in a lifetime (which we saw in the 90s), which starts everyone trading, to make another Ameritrade or eTrade. When that happens and if Zecco is still humming along, then maybe I’ll be wrong. Doesn’t mean they won’t survive, even build a nice little business – but pose a threat to the big guys? Not without a raging bull market. I’m certainly no market prognosticator, but with $70 oil and the US engaged in hostilities across the globe, I don’t like the odds of that in the next few years.
2. Discount Brokerages expect commissions to go to 0. Schwab has dropped commissions from $30 to $10 in two years and restructured the company accordingly. They’re moving into advisory services, managed accounts, proprietary mutual funds, and banking/lending, because they know they can’t depend on trading commissions as a revenue stream forever. I don’t know the specific numbers, but I do know Schwab and Fidelity both make far more money from mutual fund and cash balances than they do from trading. Banking probably saved eTrade after the last crash and now they’re moving into the advisory business as well. Ameritrade acquired Waterhouse in part because of its advisory services. The $0 trade is the future, but I think these firms will have several more years to adjust their models to deal with it.
3. Just because it’s cheap, it doesn’t mean people want it. If cheap was all that mattered, Schwab should have killed Merrill years ago. They’ve certainly impacted them, but Merrill remains a force in the financial services world. They’ve survived in large part, because when it comes to money (even if it doesn’t help performance), relationships seem to matter. Case in point: how are Schwab and Fidelity now attacking Merrill, Smith Barney, etc? By selling relationships.

Now, all that said, if Zecco could build a killer active trading platform and attract the cream of the Active Trading crop from these guys, they’d have something, but I just don’t see that happening. The cream of the Active Trader crop is not a hyper price-sensitive 22 year old with no assets. They’re older, they’re established, they have significant assets, and they typically only trade with some of those assets. I don’t see them running to Zecco to save themselves a few grand per year. The big brokerages will create relationship offers that will satisfy a healthy percentage of these guys. Zecco is as likely to find itself brawling with companies like TradeStation, which has a great product, a loyal following, and is already pretty damn cheap.

So what will Zecco attract? If they build an absolutely killer Active Trading platform, they could make me eat my words. If their community has the strength from which fee-based advisory services or mutual funds could emerge, then there could be a fine business here. But if it’s just a me-too brokerage site with ads, they’ll get the young and the price sensitive with few assets. And what happens when the young become the middle-aged? Their assets will go to the big guys with a broader array of services.