Posted January 26, 2023

Debt is daunting—its labyrinth of complex rules, opaque governing bodies, and unique vernacular makes it difficult for the average consumer to understand. Concepts like credit scores, APRs, retroactive interest, and collateral can be overwhelming for financial services experts, let alone the traditional credit card holder. And yet, the average American carries four  credit cards, and outstanding credit card balances in the U.S. are currently hovering around $1 trillion. (While not all spending on credit cards is “debt,” it can result in debt, should the cardholder fail to repay their balance on time.) Add in mortgages, auto loans, personal loans, and the like to a typical consumer’s financial picture, and you’re looking at an overwhelming number of open lines of credit across multiple providers with multiple payback schedules. 

For all these reasons and more, what consumers do know and agree upon about debt is that once they have it, they’re probably thinking about how to get out of it. Or, at a minimum, how to find a provider that may give them some price relief on their monthly interest payments. Similarly, providers of debt—banks, credit card companies, and non-bank lenders—are also constantly on a search, but what they seek is new customers. With credit underwriting serving as a core competency for many of these firms, they are particularly focused on finding “mispriced” debt holders, that is, those customers paying higher interest rates than their creditworthiness would suggest they should. That way, they can offer more competitive rates and win over said customers’ business.

Enter Method, an embedded, debt-focused API disrupting the $4 trillion bill pay market, an astonishing portion of which still moves via paper checks. Through partnerships with consumer fintech companies (e.g., personal financial management platforms, neobanks, online lenders), banks, credit bureaus, and credit unions, Method allows consumers to link all their outstanding liabilities accounts using just a phone number and subsequently enables its customers (the businesses mentioned above) to make real-time payments to more than 15,000 financial institutions. 

Many of the most popular types of debt offerings are for debt consolidation products (like balance transfer credit cards or personal loans), in which the new lender pays off a consumer’s existing debts and rolls them into one new loan at a lower interest rate. The repayment component of this equation has historically been slow, manual, and error-prone. Lenders are frequently mailing paper checks to pay off old balances, which takes days if not weeks to fully settle once you account for shipping time. 

Jose and Marco felt this pain point acutely at GradJoy, their first foray into trying to solve consumer debt pain points. GradJoy was a student loan repayment optimization engine, and while the offering deeply resonated with the consumers it was helping, the user experience was often full of friction. Aggregating liabilities took users’ time, and repaying them was varying degrees of painful depending upon the financial institution holding the original loan. Jose and Marco found themselves spending a disproportionate amount of their time building out the infrastructure (rather than consumer-facing) part of their stack, and realized that effort in itself could allow them to have the most consumer impact at scale by embedding their functionality into other lenders. So they teamed up with Mit, a Wharton MBA with deep startup operating experience, to start building Method in earnest. Today, Method works with dozens of business customers of all shapes and sizes to make onboarding and repaying consumer debt accounts as seamless as possible.

We’re thrilled to announce we’re leading Method’s Series A and that I’ll be joining the board. We believe Method will serve as a foundational piece of infrastructure for the future of how consumers and lenders manage and repay outstanding debts. If you find yourself going through a particularly magical onboarding experience of syncing up all your debt accounts with just your phone number, you’ll know Method is working on your behalf behind the scenes. For lenders interested in working with Method, you can learn more on their website.