A method for flagging a pre-approved installment transaction for issuer processing includes: receiving installment data, wherein the installment data is related to an installment transaction pre-approved by an issuing financial institution and includes a primary account number, pre-approved amount, and transaction criteria; receiving a transaction message including the primary account number, a transaction amount, and transaction data; verifying compliance of the payment transaction with the installment transaction based on a correspondence between the pre-approved amount and transaction amount and the transaction criteria with the transaction data; storing an installment flag in the transaction message upon successful verification; and transmitting the transaction message including the installment flag to the issuing financial institution via the payment network.