Following the Money: The World’s First End-to-End, Non-Closed Payments Tracking System

Sent! Your payment should arrive in 1 to 3 days.

This message, which you have probably seen dozens of times, is the furthest most apps can go when you send money from one place to another. It is the status quo in the industry. And it’s pretty weird.

You may be wondering, why? Why is it that even the largest fintech apps in the world cannot tell you the exact moment your credit card has been paid off? Why just “your payment should arrive in 1 to 3 days”?

The answer is that until recently, there was no non-closed system that could track payments end-to-end. It is not that apps don’t want to tell you when a payment lands. It’s that they can’t.

At Method, we process more than $2B in annual payment volume. Our customers are companies like SoFi, Figure, and BHG. Our end-users (the people whose payments we process) are people like you and me who make payments through these apps: usually to liabilities, like credit cards and mortgages.

Our end-users are reasonable people—they want to know when their payments actually land, like when their credit card bill has actually been paid. It’s stressful not to know. But in the past, the only way for our end-users to know whether a payment had reached its destination account was to manually log in to that destination account. Or to call the company that owns the destination account. This is annoying to do, especially if you are making payments to multiple different places.

We recognized that our end-users really wanted to know when their payments arrived. And our customers really wanted to be able to show them. So we decided to build the world’s first non-closed, end-to-end payments tracking system.

Following the money is harder than you might think

There are two components involved every time money moves: a source and destination.

It’s pretty easy to track money leaving the source, and pretty hard to confirm the money has reached the destination. It sounds counterintuitive, and it is, so let me show you how it works.

Imagine Sophia, a SoFi user, has been carrying a $5k balance on her Chase Sapphire Reserve at a high interest rate. She gets approved for a SoFi personal loan at a much lower interest rate and uses it to pay off her credit card balance, saving her hundreds in interest. Sophia wants to know when the payment hits—and SoFi wants to know, too.

• Pending: The status a transaction receives as soon as it has been initiated.

• Processing: When the money has been pulled from the source account.

• Sent: When the payment has been executed and sent to the banking networks. It is at this stage that we, and everyone else, lose visibility.

Note: Each system classifies payments differently. If you pay directly from your bank to a credit card account a payment may simply have two statuses (Pending and Paid), whereas if you transfer from Venmo to your bank account the payment may have three (Initiated, Pending, and Complete). The above is a description of how we do things at Method, which is not the same as how other places do them.

In the past, after a payment was classified as Sent, the best we could do was tell our customers, and thus their end-users, to expect funds in 1 to 3 days. And the only way to confirm whether the payment reached the destination account (i.e. when a payment has “posted”) was for the end-user to manually log in to their account or to call their bank—which is frustrating and time-consuming.

A new Method payment status: Posted

Now, when a payment arrives at the destination account, Method automatically relays a new status—Posted—to our customers. This closes the loop by confirming that the money has arrived.

This sounds rather simple, but strangely enough ours is the first non-closed system in the world that is capable of end-to-end payments tracking. 

I say “non-closed” because companies that control both the source and the destination can do this already. Zelle, for example, can confirm when a payment went from one account to another. Venmo, on the other hand, cannot confirm when your transfer hits your bank (they don’t control your bank).

So how did we do it at Method? Two steps.

First, we identify if a payment was made on an account. We do this using the near-real time data we get from our integrations with financial institutions (FIs) and bureaus. This is somewhat complex to handle.

Second, we extract metadata from those payments (like timestamp, amount, and payment method) to determine if the payment was initiated from Method. We can identify single payments from Method, multiple payments from Method (even if they were grouped together by the FI), and multiple payments from Method and other sources (in which case we can determine which payments are from Method).

We then update our customers automatically through our API and webhooks that the payment has been posted in the destination. Happily ever after.

Peace of mind, end-to-end

With Method’s Payment Tracking, customers like SoFi no longer have to settle with giving customers an unhelpful “1 to 3 days” boilerplate. And end-users like Sophia no longer have to worry about payment statuses or logging into a dozen different accounts for real-time statuses. This increased confidence has unlocked our customers to scale their payment operations significantly, enabling Method to process over $2B in annual payments—a number that is growing fast.

If you’re interested in working on payments with me and building things that don’t yet exist in the world, reach out: stephen@methodfi.com.