Receipts are a nightmare. These startups want to help you wake up

November 16, 2011, 3:40 PM UTC

The modern receipt is a sorry thing. Talismans of buyers’ remorse, impulse decision-making and reimbursement migraine, receipts are bothersome to file and even worse to lose. Two Palo Alto startups want to fix that. Slice and Lemon may sound more like soft drinks than cutting-edge tech, but they use clever software to address the problems of both printed and electronic receipts. Both are free.

Slice compiles all the electronic email receipts stored in your inbox. It essentially scans email to find receipts and order confirmations, picking up any tracking numbers along the way. The service keeps tabs on the timing and location of deliveries, mapping their location while en route. Slice also notifies users if recent purchases dropped in price, enabling them to potentially get a better deal.

The company launched a phone app yesterday, which CEO Scott Brady expects to drive adoption. Users can remain logged in at all times to be alerted of impending package arrivals. (They can also log in with each use to avoid prying eyes that might spoil gift surprises.) Slice is now available as an app, online and as a built-in tab in Yahoo (YHOO) Mail. Slice can also itemize each purchase, something credit companies cannot track when they list spending, according to Brady.

The service appears especially suited for high-volume online shoppers, such as Gilt Groupe enthusiasts and other daily deal users. “For people who order a lot online, it’s a significant tool,” he says. Brady notes that the fastest growing area for receipts, however, is through brick-and-mortar retailers such as Apple (AAPL) Stores, which are increasingly offering their receipts as email.

Printed receipts are a different animal. Lemon tackles the problem by allowing users to take photos of receipts that are then stored and made searchable online. While photographing receipts is not new, Lemon’s innovation is to digitize them to create a comprehensive master list. Once digitized, receipts can be dealt with as easily as email receipts.

Will the two compete? Perhaps. Lemon CEO Wences Casares admits that some consumers will only be willing to use one solution. (In fact, Lemon and Slice work within a block of each other and the leadership teams consider each other friends.) Slice most benefits online shoppers, while Lemon works for those who must carefully monitor all expenses, he adds. Slice says it has processed 3 million transactions, while Lemon boasts 300,000 users, primarily using iPhones and Android phones.

Privacy and profit may be the bigger concerns. Both companies say they take great pains to ensure security, encrypting transaction information for example. The bigger challenge will come if consumers begin rapidly adopting their services. The firms could then be tempted to find ways to use the data being generated to grow their profits. Currently, Lemon offers a free service as well as two levels of paid subscriptions. Slice is free but may offer targeted deals or limited information to affiliate merchants in the future.

Both services appear to provide intuitive solutions to the hassle of monitoring receipts. Now, both will tackle the holiday shopping frenzy between Thanksgiving and the end of the year — a busy season for receipts if there ever was one.