Introduction:
With the help of the Plaid service, you may connect your financial accounts and share their data with a variety of apps, services, and businesses. You might decide to give Plaid access to your account details in order to use a service or product, such as Venmo, Chime, Acorns, Truebill, or the NerdWallet app, instance. Your account number, account activity, and contact information are just a few examples of the kinds of information that may be shared.
About:
Based in San Francisco, California, Plaid is a provider of financial services. The business creates a data transfer network that underpins digital banking and fintech applications. A technology platform made by Plaid’s offering facilitates connections between applications and consumers’ bank accounts. Various financial technology applications, it enables customers and businesses to communicate with their bank accounts, check balances, and make payments. The business conducts business in the United States, Canada, the United Kingdom, France, Spain, Ireland, and the Netherlands.
Visa declared its intention to purchase Plaid for $5.3 billion on January 13, 2020. After the US Department of Justice objected, Visa later backed out of the agreement for data privacy, antitrust hazards, and monopolist reasons.
By linking your financial accounts to suitable apps and services of your choice, Plaid serves as a mediator. Plaid argues that given the complexity involved, it makes sense for these relationships to be managed by a third party.
- Account holder details One or more of the details requested at a financial institution can be your name, address, phone number, and email address.
- Details of account transactions: Balances, transaction dates, transaction kinds, and transaction descriptions are examples of information that may be exchanged.
- Account-specific information Data information about your account type, number, routing number, and the amount may also be shared.
Website : https://plaid.com/
Founder & Team:
Before starting Plaid in 2012, Perret and William Hockey met while working as junior Bain consultants. Customers of Plaid include Venmo, Coinbase, and Robinhood.
History:
In 2013, Zach Perret and William Hockey founded Plaid. Initially, the duo tried to create software for bookkeeping and consumer financial management, such as budgeting. When faced with challenges establishing the necessary bank account connections for these tools, they made the decision to shift their primary area of company concentration to a unified banking API.
Name & Logo:
Plaid Highlight:
| Company Name | Plaid |
| Founders | Perret and William Hockey |
| Started at | 2012 |
| Competitors | Codat.Stripe Connect.G2 Deals.MX.Lightico.Envestnet Yodlee.IntSig OCR Solutions.Flinks. |
| Website | https://plaid.com/ |
| Revenue | $200 million |
| Country | USA |
| Customer care Email | – |
| Customer care Contact details | – |
| Company Valuation | $13.4 billion |
| Industry | Fintech |
| Headquarters | San Francisco, California |
Revenue:
Plaid paid $200 million to acquire rival Quovo in January 2019. Plaid stated on January 13, 2020, that it had signed a binding contract to be purchased by Visa for $5.3 billion. The transaction, which valued the company at twice its most recent Series C round valuation of $2.65 billion, was anticipated to close within the next three to six months, pending regulatory approval and other closing requirements.
According to a presentation deck created by Visa, the agreement called for Visa to pay $4.9 billion in cash and roughly $400 million in retention equity and deferred equity. The acquisition, according to Alfred Kelly, CEO of Visa, was made as an “insurance policy” to counter a “threat to our critical US debit business.”
The United States Department of Justice filed a lawsuit on November 5, 2020, in an effort to stop the acquisition, claiming that Visa is a monopolist attempting to buy out Plaid in order to end a danger to its business. Visa stated that it rejects the claim and “intends to strongly defend the transaction.” On January 12, 2021, Plaid made the official announcement that the proposed merger agreement had been canceled, which was almost precisely one year after the proposal was first made public. Plaid stated in January 2022 that it had paid an undisclosed price to buy Cognito, an identity verification and compliance platform.
Funding & Investors:
A $2.8 million seed round was raised for Plaid by Spark Capital, Google Ventures, and New Enterprise Associates in late 2013. Plaid obtained $12.5 million in funding from New Enterprise Associates in 2014. The company announced a $250 million Series C investment with a $2.65 billion value on December 11, 2018. Mary Meeker served as the lead investor in the investment round, which also included newcomers Andreessen Horowitz and Index Ventures.
Participants included former backers Goldman Sachs, NEA, and Spark Capital. Plaid later disclosed that the round included investments from both Visa and Mastercard. Plaid raised a $425 million Series D on April 7, 2021, for a $13.4 billion value.
| Round | Date | Lead Investor | Amount Raised | Valuation |
| Seed | September 19, 2013 | Spark Capital | $2.8 million | — |
| Series A | November 15, 2014 | New Enterprise Associates | $12.5 million | — |
| Series B | June 19, 2016 | Goldman Sachs Investment Partners | $44 million | — |
| Series C | December 11, 2018 | Mary Meeker, Index Ventures, Andreessen Horowitz | $250 million | $2.65 billion |
| Series D | April 7, 2021 | Altimeter Capital | $425 million | $13.4 billion |
Business Model:
A FinTech business called Plaid acts as a go-between for your personal bank account and the financial apps you use. Users must link their bank accounts in order to use platforms like Acorns or Betterment so that the applications may analyze financial statements or accept deposits and withdrawals.
The issue has historically been that each bank has a unique, complicated legacy system that necessitates app developers to create unique links for each and every one of them. By providing an intermediary connection layer (through an API) for app developers, Plaid addresses this issue. The integration is made significantly easier by the standardization of the API across all banks.
End users can choose to give Plaid their name, account number, account type (such as debit or credit), balance, and a variety of other personal details. After then, Plaid uses end-to-end encryption to store and protect that data. However, users can choose how little of their data they wish to share with outside applications.
Using Plaid is the easiest thing a consumer could ask for. Users just choose the financial institution they want to connect with and their login information for that account when signing up for a Plaid-powered app.
Services Offered thru Plaid:
Plaid creates a network for data transport that supports Fintech and online financial services. From a customer perspective, this means they free up the infrastructure development process by allowing popular apps like Venmo and Chime to offer banking services. Users of the apps must give Plaid their bank login information in order to link their bank funds instantly.
Users may authorize access to bank data using their bank’s portal rather than providing user credentials to Plaid for some banks. Plaid launched the “all-new Plaid Link” in October 2020 to streamline the steps required to link financial products.
Awards & Recognition:
There is no data on it.
Controversy:
The business has drawn criticism for harvesting user data, pretending to be bank login screens, and failing to adequately disclose the service’s privacy dangers. In 2020, TD Bank filed a lawsuit against Plaid, alleging that the latter was attempting to “dupe” its customers.
Plaid settled a $58 million class action lawsuit in 2021 over allegations that the company gave personal banking information to outside companies without users’ permission. Five different claims have been consolidated into one in the settlement. Each alleges that Plaid collected and disseminated specific financial information without the customer’s knowledge or permission.
The plaintiffs claimed that Plaid had “exploited its role as middleman.” The settlement has an estimated 98 million people as a direct impact. Claimants will have the option of choosing to automatically receive the settlement funds through online payment services like PayPal and Venmo. Each person would only receive 60 cents if all 98 million claimants submitted claims.
Competitors:
Top 10 Alternatives & Competitors to Plaid –
- Codat.
- Stripe Connect.
- G2 Deals.
- MX.
- Lightico.
- Envestnet Yodlee.
- IntSig OCR Solutions.
- Flinks.
Latest News:
- At a $13.4 billion value, Plaid receives $425 million in investment.
- Alliance to Promote Open Finance Innovation Throughout the Banking Sector Announced by Capco and Plaid.
Future Plans:
Axios reporters probed Perret on Plaid’s plans for future acquisitions. The CEO noted there is plenty of runways open for both acquisitions
Some FAQs:
How does Plaid generate revenue?
Some fintech businesses, like Plaid (more on this later), recoup their costs by charging businesses to use their APIs. Companies that offer financial APIs have a variety of fee arrangements; some examples include: paying for each API call.
What is the value of Plaid?
$13.4 billion.
Who is behind Plaid?
Zach Perret and William Hockey, cofounders of Plaid, were among the aspiring businesspeople looking to make their mark as the initial wave of fintech apps started to profit from the new regulatory guidelines in the early 2010s.
Why is Plaid so popular?
Plaid, which originated in a colder region, is a common pattern for winter clothing, such as coats and blankets. The Scottish heritage encourages a layered, bundled-up appearance that is prepared to withstand the coldest climates.
Why did Plaid get Cancelled?
According to Tesla news site Electrek, the justification offered was that in Tesla’s current opinion, it is not necessary for an EV to have a range of more than 400 miles on a single charge.
Conclusion:
You don’t need to register for a new account or pay for the service if an app, service, or product requires linking an account through Plaid to utilise it. Plaid may be able to link and exchange financial data as long as you follow the guidelines given in the app you’re trying to use, such as entering the username and password for an approved bank account.
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