Method, a startup that aims to make it easier for fintech developers to embed refund, balance transfers and bill payment automation into their apps, today announced it has closed a $16 million Series A funding round led by Andreessen Horowitz , with the participation of Y Combinator (Method’s a Y Combinator graduate), Abstract Ventures, SV Angel and others. Co-founder Mit Shah says the new money will be spent on product development and growing the company’s workforce from eight to 28 by the end of the year.

Method was launched in 2021 after two of the company’s co-founders, Jose Bethancourt and Marco del Carmen, experienced firsthand the difficulties of embedding debt repayment in their previous company, GradJoy. (australiabusinessblog.com previously covered GradJoy, which attempted to help students better manage their loan repayment plans through an app-based system.) Integrating student loans into the GradJoy app turned out to be a patchwork of brittle, insecure screen-scraping APIs, physical check mailing and compliance hurdles, according to Shah.

“Jose and Marco realized there was an opportunity to provide developers with an embeddable API to add debt relief to their apps and services,” Shah told australiabusinessblog.com in an email interview. “We started Method in May 2021 to provide developers with a turnkey infrastructure.”

Shah points out that there’s no standard, technically easy way to access all of a person’s financial obligations — their student loans, credit cards, mortgages, and so on — and push money toward those obligations. Due to the lack of standardization, newer fintechs have resorted to using screen scrapers and credential-based methods to collect and access the data, he says. But there is a downside to those approaches. It can take a long time to onboard new financial institutions, and the lack of a direct connection makes it impossible to perform actions, such as paying loans, on behalf of users.

Image Credits: Method

“The industry is chasing ‘open finance’ by developing solutions around user credentials and collaborating indirectly with financial institutions,” said Shah. “We’re going straight to the source to enable read and write access for all of a consumer’s liabilities.”

Method works by taking advantage of consumer credit access protections enshrined in law as part of the Dodd-Frank Act of 2010. By using identity verification information from credit bureaus (e.g. Equifax) and wireless providers (e.g. T- Mobile) and combining it with real-time data from financial institutions’ central banking systems, Method can collect an individual’s liabilities for more than 60,000 institutions in the US and initiate tasks such as balance transfers, disbursements, paying bills and more.

“Method’s data API allows our customers — consumer-facing companies — to query all of a user’s existing commitments using just their phone number. The liability accounts, once connected, are instantly writeable and payable,” explains Shah. “Method’s payment API, meanwhile, allows users to push money to any type of consumer debt and account. Method handles the entire money movement process end-to-end, keeping you out of the flow of money.”

Method processes a lot of sensitive data, which can cause some end customers to pause. But Shah said the company’s privacy policy was written to allay consumer advocates’ fears, specifying that Method only collects “minimal user information” and does not sell user data to third parties. In another step to build trust, the start-up plans to launch a portal where users can log in with Method to manage the data they share with other apps and services.

Method claims it has 35 customers and over 75,000 users, with annual recurring revenue of about $2.25 million. As the startup competes against big names like Plaid, MX, Spinwheel, and Dwolla, Shah sees Method holding its own, especially as the platform rolls out new features in the coming months, including real-time credit card transactions, instant balance transfers, and improved live data points for liabilities.

“Currently, new-age fintechs don’t have access to [sophisticated] infrastructure and traditional financial institutions have set up manual processes to retrieve real-time data on consumer credit lines or make payments to them through checks,” Shah said. “We enable fintechs to innovate faster and compete with larger banks with our turnkey real-time data and payment operations. Traditional institutions can onboard users faster and see great savings from manual back-end processes… We have seen demand for our product from all areas of traditional finance and new fintechs in lending, debt consolidation and personal finance management.”

To date, Method has raised $18.5 million in venture capital.