What technology does Plaid Startup use

Why is Visa paying $ 5.3 billion for the Fintech Plaid? It's about APIs

5.3 billion US dollars - that is the sum that the Visa credit card company has put on the table for a fintech startup called Plaid, which is largely unknown. Plaid, founded in 2013 by Zach Perret and William Hockey in San Francisco, has become something like the pipe system of the fintech industry. While other startups build virtual banks and other services, the new Visa subsidiary has become an integrator and is often compared to other startups like Stripe or Twilio.

“This purchase is the natural evolution of Visa’s 60-year journey from securely connecting buyers and sellers to connecting consumers with digital financial services,” said Visa on the billion-dollar acquisition. Plaid has won a number of customers who all work in the fintech sector - Acorns, Betterment, Chime, Transferwise, Venmo and Coinbase are among those on the customer list.

The data line in the background

Consumers do not notice Plaid, but a quarter of all people who have a bank account in the USA are said to have used fintech services. Because Plaid offers developers of apps and other financial services the APIs with which data such as transaction history or identity can be easily transferred from A to B. For example, if you link your bank account to an app for analyzing your financial life, Plaid's technology in the background is probably responsible for ensuring that the data can flow in real time.

“Plaid is a leader in the fast growing fintech world with the best skills and talents in its class. The acquisition, combined with our many ongoing fintech efforts, will enable Visa to add even more value to developers, financial institutions and consumers, ”said Visa CEO Al Kelly of the purchase.

+++ Fintech: “APIs will turn banking upside down. They are like Lego “+++

APIs from 200 euros / month

Around 2,600 fintechs around the world are to rely on Plaid in order to save themselves a lot of development work. You can use the APIs from 200 euros per month, depending on the volume and user, it quickly increases. It is not known whether Plaid is already operating profitably. Before the takeover by Visa, investors put a lot of trust in the San Francisco startup and invested a total of more than $ 350 million with a recent valuation of $ 2.65 billion. Visa, like Mastercard already on board as an investor, has now doubled this rating.

There are growth opportunities for plaid especially in Europe. The PSD2 directive launched in September 2019 clears the way for so-called open banking. The point is that account information services and payment initiation services are allowed to access their bank account with the consent of the user, for example to analyze their transactions. Plaid, with its easy-to-use APIs, can play an important role in networking the services and data.

+++ Open Banking: PSD2 Directive opens up new opportunities for Fintechs +++

"Plugging in" digital banks

As reported, observers predict a great future for the fintech sector. In 2019, no other startup vertical in Europe invested as much money as fintech startups. “APIs will turn banking upside down, they are like Lego,” said Nigel Walder, ClearBank's Chief Operating Officer, at the “Digital Difference in Banking” conference in London last year. In the future, you will be able to plug in a digital bank yourself using APIs.

The Viennese web specialist Franz Enzenhofer, who worked for the British fintech Curve for a while, assumes that the linking of digital services can even become a new professional group. Automators, integrators, connectors (m / f / d) will emerge as a separate professional group and will take care of it. “The world of services, tools and software is fragmented. These are not linked to each other a priori. Services as well as special skills will be created to connect and integrate these with one another, ”said Enzenhofer recently in a guest commentary on Trending Topics.