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Method, a startup that aims to make it easy for fintech developers to integrate payments, balance transfers and billing automation into their applications, today announced the closing of a $16 million Series A funding round led by Andreessen Horowitz with Y Combinator. Method (a graduate of Y Combinator), Abstract Ventures, SV Angel and more. Co-founder Mitt Shah said the new cash will go toward product development and growing the company’s headcount from eight people to 28 by the end of the year.
The method started in 2021 after the two founders of the company, Jose Betancourt and Marco Del Carmen, experienced problems with their previous company, Gradjoy, including debt repayment. (TechCrunch previously covered GradJoy , which seeks to help students better manage their loan repayment plans with an app-based system.) Integrating student loans into the GradJoy app has become a matter of broken, insecure screen-scraping APIs, sending physical checks. And barriers to compliance, Shah said.
“Jose and Marco realized there was an opportunity to provide developers with an embeddable API to add debt payments to their apps and services,” Shah told TechCrunch in an email interview.
Shah points out that there is no standard, technically simple way to push money toward all of a person’s financial debts — student loans, credit cards, mortgages, and so on. Due to lack of standardization, new age fintechs have started using login credential based methods to collect and access the data using screen scrapers, he said. But there are downsides to those approaches. It can take a long time to onboard new financial institutions, and the lack of direct contact can affect consumer behavior such as paying off a loan.
Image Credits: method
“The industry has been pursuing ‘open finance’ by developing solutions around user credentials and working indirectly with financial institutions,” Shah said. We go straight to the source to enable read and write access to all consumer debt.
The mechanism works by taking advantage of consumer credit access protections that were legislated as part of the Dodd-Frank Act of 2010. By tapping identification information from credit bureaus (eg Equifax) and wireless service providers (eg T-Mobile) and combining it with data from financial institutions’ core banking systems, the system can collect a person’s debt at more than 60,000 institutions. US and start functions like balances, payments, bill payment and more.
“Method Data’s API allows our customers—consumer-facing businesses—to retrieve all of a user’s accounts receivable using just their phone number. Accounts receivable are automatically written and paid once connected,” Shah explained.The Method Payment API, on the other hand, allows users to push funds to any type of consumer debt or account. Method handles the entire cash flow process end-to-end, leaving you with cash flow.
The method handles a lot of sensitive data, which may give some end customers pause. But Shah said the company’s privacy policy was written to address the concerns of consumer advocates, saying the system only collects “minimum user data” and does not sell user data to third parties. In another step toward building trust, the startup plans to launch a portal where users can seamlessly manage the data they share with other apps and services.
Method claims to have 35 clients and more than 75,000 users, with annual recurring revenue pegged at around $2.25 million. Shah sees the startup holding its own against big names like Plaid, MX, Spinwheel and Dwola, especially as the platform rolls out new features over the next few months, including real-time credit card transactions, instant balance transfers and improved live accountability of data points.
“You can’t find new age fintech these days [sophisticated] Infrastructure and traditional financial institutions have manual processes set up to retrieve real-time data on customer lines of credit or pay them by check,” Shah said. “We give fintechs the ability to innovate quickly and compete with big banks with real-time data and payment operations. Traditional institutions are quickly on board with users and can see huge savings on manual back-end processes… We’ve seen demand for our product in the lending, debt consolidation and personal finance management space from all traditional finance and new age fintechs.
To date, Method has raised $18.5 million in venture capital.
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