Most of us rely heavily on our smartphones these days, but when it comes to choosing the right bank, it can get a bit confusing.
According to Forbes, back in 2022, a whopping 78 percent of adults in the United States preferred handling their banking online rather than going into a physical branch. That’s pretty impressive, especially considering that online-only banks are still quite new to the scene.
These digital banks count on services like Plaid to swiftly and securely link users’ bank accounts with various apps. Today we will break down what Plaid banking is all about, examine its safety, explore its perks, and highlight some cool ways to integrate it with other services.
What is Plaid?
The financial technology (fintech) industry is growing fast. Fintech includes online banks, money transfer apps, investment platforms, and other digital tools related to money and banking. If you’ve used an app or website to pay for something or check your finances, you’ve used a fintech product.
Plaid is a fintech company that links third-party apps with the banks that hold your money. It lets you safely connect your bank accounts to other apps and services outside your main bank.
Once Plaid is connected to your accounts, third-party apps can access your financial data, with your permission, to do things like send money to a friend, pay a bill, or help you budget and track your money.
How does Plaid work?
To understand how Plaid works, you first need to know about APIs, or application programming interfaces. An API is like a set of instructions that lets different software applications talk to each other.
For example, if you have a weather website and want to show live weather updates, you can use an API to connect your website to an app that has the weather data. The API allows the data from the app to appear on your website.
For ACH (Automated Clearing House) payments, Plaid uses a network of APIs to verify who you are, request access to your financial data, and link your bank accounts to Plaid’s system. Once Plaid has access to your data, it can help with transactions by securely sharing information between your bank and the Plaid app.
Which Companies and Banks Use Plaid?
Plaid is a popular platform that many well-known companies and banks use to manage their financial connections. Plaid works with over 12,000 financial institutions in the United States, Canada, and Europe, so there’s a good chance your bank uses it.
Some of the companies and banks that use Plaid are:
- Acorns: Acorns is a financial technology company that specializes in micro-investing and robo-advising services.
- American Express: American Express is a multinational financial services corporation known for its credit card, charge card, and traveler’s cheque businesses.
- Copilot: Copilot is a financial management platform that helps users organize their finances and achieve their financial goals.
- Merrill Lynch: Merrill Lynch is a wealth management division of Bank of America known for its brokerage, investment banking, and financial advisory services.
- Prudential Retirement: Prudential Retirement is a subsidiary of Prudential Financial that provides retirement solutions, including pension risk transfer, retirement planning, and investment management services.
- SoFi: SoFi, short for Social Finance, is a finance company that offers a range of financial products, including student loan refinancing, mortgages, personal loans, and investment services.
- Square: Square is a financial services and mobile payment company that provides merchants with point-of-sale hardware and software solutions.
- U.S. Bank: U.S. Bank is the fifth-largest bank in the United States, offering a wide range of financial services, including banking, mortgage, investing, and payment services.
- Venmo: Venmo is a mobile payment service owned by PayPal that allows users to transfer money to others and make purchases using a mobile app.
- Wells Fargo: Wells Fargo is a multinational financial services company known for its banking, investment, mortgage, and consumer finance services.
Is Plaid safe?
Plaid works with many banks and believes your financial information belongs to you. Here are some ways Plaid protects your data and privacy:
- Full disclosure: Plaid Banking is clear about how it works with your finances. You’ll see Plaid’s logo and an explanation of its role whenever an app uses its services.
- Control over your data: When you give Plaid Banking access to your financial information, you can choose which accounts it pulls data from. You don’t have to share everything.
- Plaid Portal: This control center lets you see all the connections you’ve made using Plaid Banking in one place, making it easy to disconnect accounts when needed.
- Permissions Manager: Apps can use Plaid’s permission management API to create their own privacy settings for Plaid connections, which helps build trust and safety.
What are the benefits of using Plaid?
Faster processing time
Plaid speeds up payment processing with its quick data gathering and verification processes.
Securely connecting to users’ bank accounts and getting transaction data in real time, Plaid makes the payment verification process faster. When a payment starts, Plaid can quickly check account details and available funds, speeding up transaction approval.
Better security features
Plaid keeps improving its security to protect users’ financial data. It includes features like multi factor authentication, encryption, and monitoring for suspicious activities. Plaid also works with top cybersecurity firms to fix any system weaknesses.
Better user experience
Plaid makes things easier for both businesses and consumers.
Users can connect their financial accounts easily, and businesses get quick access to data, making it smoother to accept ACH payments. Plus, with Plaid’s insights, businesses can offer users personalized tips while keeping their financial info safe.
How do you integrate Plaid?
To integrate Plaid ACH into your business system, first sign up for a Plaid account. You’ll get API keys, including a public key and a secret key, which are needed to verify your API requests.
Next, choose the integration method that fits your needs best. For user-facing apps, use HTML, JavaScript, or mobile SDKs to add Plaid Link to your app’s interface.
Your Plaid API keys will be used to verify any requests through Plaid’s servers. Use your keys in the headers of your HTTP requests. Once a user links their bank account, you can access their financial data through Plaid’s API endpoints.
Final Thoughts
Plaid makes it easy and secure to connect your bank accounts to various apps, helping with tasks like sending money, paying bills, and budgeting. Seamlessly integrating with over 12,000 financial institutions, Plaid ensures that your financial data is always up-to-date and accessible.
Many well-known companies and banks use Plaid to streamline their financial processes, making transactions faster and more efficient. With strong security features and a user-friendly experience, Plaid is a reliable choice for managing digital banking needs, offering peace of mind while enhancing convenience.
FAQs
What is Plaid?
Plaid is a financial technology (fintech) company that connects third-party apps with banks to let users securely link their bank accounts. This allows for services like sending money, paying bills, and budgeting through various apps.
How does Plaid work?
Plaid uses APIs (application programming interfaces) to connect your bank account to other apps. These APIs verify your identity, request access to your financial data, and link your bank account, allowing secure information sharing for transactions.
Is Plaid safe to use?
Yes, Plaid prioritizes your data security with features like multifactor authentication, encryption, and monitoring for suspicious activities. It also allows you to control which accounts share data and offers a Plaid Portal to manage your connections.
Which companies and banks use Plaid?
Plaid is used by over 12,000 financial institutions in the U.S., Canada, and Europe, including well-known names like Acorns, American Express, Venmo, and Wells Fargo. This makes it likely that your bank or favorite financial app uses Plaid.