[HN Gopher] Launch HN: Method Financial (YC S19) - API to embed ...
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Launch HN: Method Financial (YC S19) - API to embed debt repayment
into your app
Hi HN, we're Jose and Marco from Method (https://methodfi.com). We
are building a developer-first API that makes it easy for
developers to embed debt repayment into their applications. We
enable your business to push money to any type of consumer debt,
like student loans, credit cards, and mortgages, on behalf of your
users. Making payments to consumer debt on behalf of individuals
is an archaic process. In most instances it involves mailing
physical checks. If APIs exist at all, they are brittle. Figuring
out how to do this with reasonable UX is costly, time-consuming,
and involves lengthy compliance processes. Fintechs have innovated
to help users manage savings and investments, but so far have done
little with debt, which is actually many people's biggest anxiety.
Ballooning American consumer debt means there's a great need in
this space, but fintechs attempting to enter it run into this issue
of how hard it is to offer payments. That's the problem we solve.
By using our API, any company can embed debt repayment into their
platform with instant access across 10,000+ financial institutions,
covering 95% of all consumer debt. We ran into this while building
our previous startup called GradJoy. It started as a side project
to manage our student loans, then turned into a PFM (personal
finance manager) that connected all your student loans to one app
and calculated the optimal way to get you out of debt. We got into
YC S19 with this. Our next step was to connect with APIs and make
payments on behalf of users. As Demo Day was nearing, integrating
payments was taking longer than expected. We had assumed there
would be an API solution, but we were unable to find one. We asked
fellow founders in the lending space and told us we had to send
physical checks to student loan servicers! Given our deadline we
spun that up, but ran into constant issues with checks taking
forever and getting lost in the mail. Managing payments was
becoming our full-time job. After Demo Day we worked to get
integrated directly with the financial institutions to be able to
make payments online. It took forever to jump through all the
costly compliance hoops and work with slow-moving organizations.
Once we finally rolled out electronic payments, we got a lot of
interest from other YC founders who wanted to know how we did it. A
lot of them asked if they could just use our internal payment APIs.
Eventually we decided to pivot to Method Financial and focus on
making it easy for developers to add debt repayment to their own
apps and services. Our solution is a developer-first API that
handles account verification, money movement and transaction
confirmation via direct integration into the banking network. To
initiate a payment, developers just have to send a source account
(where the money is coming from), a destination account (where the
money is going), a transaction amount, and in some cases additional
user verification (for compliance). That's it! On the back end we
are connected to 10,000+ financial institutions because of our
direct relationships with the banking core providers. This gives us
access to networks of intra-bank payment rails. As soon as a
payment is initiated from the customer side, we verify the end-user
(KYC/AML), initiate money transfer and return confirmation in real
time. Settlement usually completes on the same day. No more paper
checks, no multiple integrations or screen-scraping, no transaction
limits, far fewer returned payments, and best of all, we deal with
the compliance headaches, including all the ongoing compliance
maintenance that needs taking care of. So far, companies are using
us to do things like provide matching student loan payments as an
employee benefit, do one-click balance transfers when switching
credit cards, and allow cryptocurrency users to pay down debt or
pay bills. We charge per API call, and there are monthly minimums
similar to Plaid. Our API is live and we have a self-serve
dashboard with two environments: development mode (cannot move real
money) and sandbox mode (move real money--up to 20 live payments
for free). After a simple KYC verification, you can enable sandbox
mode and move real money at https://dashboard.methodfi.com. We'd
love for you to try out Method. You can get development and sandbox
API keys in our dashboard - no credit card required. Have you
built a similar payment infrastructure before? Have ideas for other
potential use cases? We'd love to hear your questions, experiences,
ideas and feedback! We'll be online today to answer any questions -
we're always excited to talk about fintech, payments, APIs, etc.
Author : joseb
Score : 33 points
Date : 2022-03-15 14:41 UTC (8 hours ago)
| mritchie712 wrote:
| Does Plaid let you make payments to debt?
| joseb wrote:
| They don't. Plaid is able to retrieve all the data about a debt
| using the user's credentials and that's about it. Most of our
| companies / developers use Plaid as their data source and
| Method as the payment rails.
| shortweb3 wrote:
| Great product. Congrats on the raise. How do you monetise this?
| joseb wrote:
| Thanks for the support! Right now we monetize by charging a
| flat fee per API call, similar to API-first companies like
| Plaid.
| hexo wrote:
| How is this even legal? Huh.
| joshstrange wrote:
| Very cool! I had a bootstrapped project I worked on for a while
| to do a very similar thing but yeah, between KYC/Money
| Transmitter licenses and having to send physical checks in the
| mail we shuttered the project and moved on to other things. I
| hate that we need companies like this or plaid to be able to
| interface with our finances but I'm glad they exist for sure!
| joseb wrote:
| I hate that you faced the exact same issues we did. It's
| definitely a huge pain, especially for startups trying to
| innovate in the space. Our goal is to make it easier for
| everybody from solo developers all the way to the huge
| incumbents to interface with debt.
| connorski wrote:
| Hi - do you cover medical debt? I didn't see listed on the site
| joseb wrote:
| We do! We just recently launched it and it's in a private beta
| stage. If you are interested in the beta, let me know would
| love to connect!
| connorski wrote:
| Yes - let me know the best way to connect!
| joseb wrote:
| Awesome, I'll send you a note to your personal website
| email
| samstave wrote:
| Oh look, instead of teaching people financial skills in school,
| we will eventually have an FIN.AI
|
| It will automatically calc our income and priorities and allocate
| our spending as such, which will happen automatically via CBDC.
|
| ---
|
| Seriously - this is where we are headed:
|
| ---
|
| John works as an SRE for BigTech.com, he wakes in the morning on
| April 1st 2030, payday.
|
| His automatic payment system is activated, providing him a
| summary of income and active debts, bills and payments that are
| payable.
|
| His screen shows him that he made $5,000 this pay period, before
| taxes, but he has $3500 in his deposit.
|
| From that deposit, he also has these fees due, and expected to
| deduct from his pay:
|
| Insurance, Rent, Groceries, subscriptions, etc...
|
| He will select auth for payment to each fee due via the app.
|
| ---
|
| FF: John lost his job.
|
| Now its Oct. 1st and john reviews his "Due Dash" -- which shows
| him he needs to pay X services.
|
| John has no income, and his auto-pay for things has already hit
| his account whilst he was sleeping and John basically already
| auto-payed a bunch of services he should have canceled.
|
| John is fucked. Because he paid his netflix bill automatically,
| and thus he is insufficiently funded for his Rent.
|
| ---
|
| John has a traffic ticket which he is indignant about and vows
| NOT to pay such. Methodfi.AI automatically makes him pay that
| ticket.
|
| ---
|
| HERE is my question:
|
| Every time I leave the house, I am bombarded with every aspect of
| marketing to get me to SPEND.
|
| How about creating an environment/thing and business model that
| MAKES me monet(y) as opposed to creating the tech that makes it
| EASIER to SPEND.
|
| ---
|
| So, in conclusion, please ensure you have the most exquisite
| controls over allocations and spending behavior.
| tomhallett wrote:
| I'm trying to think of the business use-cases (TAM) where
| connections to debt repayments is more value-able then the
| current solution:
|
| 1) Personal Finance Manager's like GradJoy/Mint, definitely make
| sense, where the PFM knows about all my debts and helps me
| orchestrate payments between them. :)
|
| 2) Maybe a gofundme/honeyfund where people can "gift" someone
| money but it has to go directly to paying down debt? For example:
| Grandma knows you have student loans, wants to help, but wants to
| restrict where the money goes.
|
| 3) Are there apps where I earn money (gig economy, mechanical
| turk, etc) and it is somehow better (?) to have the money go
| directly to paying off my debt and NOT going into my bank
| account? I think the loss in flexibility about my wages would
| make this usecase a poor fit, unless there were other incentives
| attached to it. For example: instead of getting $5 to you bank
| account, you'll get $5.50 to pay down debt - like a 401k match
| for debt. Note: I'm not saying that employers can/should do this,
| just thinking out loud.
| caffeine wrote:
| Of course not! You missed the most (only?) important one: more
| debt!
|
| We can provide you with a loan that will consolidate all your
| existing debt! Student debt, medical debt, car debt, credit
| card debt, mortgage debt - you name it, we'll refinance it!
|
| Install our app and you can handle all your debt in a single
| easy payment! No job? No problem! Let us take care of you.
| Install our app now!
| joseb wrote:
| Definitely #1 (and #2 to an extent) is a straight forward
| solution. We have seen some interest in #3, but mostly due to
| the gratification of getting your debt paid down without you
| thinking about it. We are working companies that offer employee
| unique employee WFH perks such as mortgage repayment or
| electricity repayment as a benefit.
|
| Some other verticals that we have seen benefit from direct
| connections to debt include: Lenders (Personal loans, credit
| cards, mortgages) and Fintechs (BNPL, Crypto, PFMS)
| smt88 wrote:
| #3 is regulated and may be illegal for W-2 employees in the US.
|
| You have to pay people with something as liquid as cash.
| projektfu wrote:
| I could see payroll providers offering it as an option,
| similar to sending money to retirement plans, post-tax
| insurance, charitable contributions, etc. I have seen payroll
| plans that purchase goods either up front or on layaway.
| evanfarrell wrote:
| so cool to see your evolution from how the company looked doing
| the batch -> now! congrats on the launch folks, this looks great.
| joseb wrote:
| Thanks Evan! Really appreciate the support.
| barbazoo wrote:
| This is great! Have you thought about moving your offering one
| step closer to the consumer and providing an app that
| consolidates all debt and recommends what to pay off first?
| Possibly even shuffling debt around between high interest and low
| interest accounts?
| joseb wrote:
| Not right now, we are focused on B2B and enabling other
| developers to build on top of our platform. Our goal is to
| build the pipes and promote new breed of debt focused fintechs.
| We are working with some stealth fintechs solving both of the
| ideas you mentioned!
| barbazoo wrote:
| That's great! Anything that helps people get out of (bad)
| debt is a step in the right direction.
| mdmccoubrey wrote:
| Interesting
| [deleted]
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