What is Plaid?

Plaid is an incredible tool within fintech with a ton of practical applications. There are many aspects of financial services that Plaid is excellent for. These include personal and business finances, open finance, digital banking, lending, and consumer payments. With Plaid, companies can find solutions for all these unique finance areas. 

With Plaid, companies can seamlessly connect their services and provide top-of-the-line security. This allows companies to give their customers the best smooth and reliable service. Unsurprisingly, many well-known financial services companies trust Plaid, such as Chime, Venmo, and SoFi. 

At its core, Plaid allows apps or fintechs to connect their services to banks and financial institutions seamlessly. This is often a massive challenge as companies need to meet the specific and often complex requirements of each bank. Fortunately, Plaid allows companies to easily integrate without investing extensively in building their own infrastructure. 

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History of Plaid

Plaid’s co founders Zack Perret and William Hockey saw there was a complete lack of transparency and easy-to-access information in financial planning. Together, they set out to change this and make financial services more manageable for consumers. Additionally, they built out API-based integrations to make customization smoother. 

Despite some initial challenges and investors unwilling to see the true value of Plaid, new players in finance saw its advantages. One of the earliest adopters of Plaid was Venmo, as Plaid allowed Venmo to connect with users’ bank accounts more easily. The success of this partnership allowed Plaid to build similar to other fintech applications. 

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How Plaid Helps Companies

Transaction History

With Plaid, it is straightforward to view transaction histories and understand the financial habits of a potential customer. Tons of valuable data are available with Plaid Transactions as companies can view the transaction amount, date, location, and payment channels. All of this data makes it straightforward to create a holistic view of the transaction habits of users or potential customers. 

Additionally, this data is updated in real-time, allowing companies to take a hard look at how users are utilizing their platforms. This makes fraud detection more efficient and enables financial services companies to make more informed decisions about how they can improve their products. Unsurprisingly, Plaid Transactions is designed to seamlessly integrate into a wide variety of systems and applications, allowing companies to begin viewing transaction history without extensive and costly development. 

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Prevent ACH Returns and NSFs

One incredibly frustrating component of modern business is when a customer attempts to make a purchase but has insufficient funds to complete the transaction. This creates additional hassle for merchants and muddies the overall customer experience. Plaid Balance can conduct real-time checks of customer accounts before initiating a transaction. 

This is especially useful for ACH payments as the customer directly links their bank account in order to make payments. Additionally, fees are often attached to declined transactions due to insufficient funds, making it doubly important that merchants have tools to prevent this. Plaid Balance also allows companies to check customer balances in real-time with each payment, enabling merchants to predict whether their existing customers will be able to continue paying the correct amount going forward. 

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Bank Account Verification

Plaid Auth is a fantastic tool allowing merchants to easily authenticate bank account information. Done in real time, Plaid Auth instantly checks the account and routing numbers when a customer provides their bank account information. Auth allows companies to accept ACH payments from every bank and credit union within the US and works with all kinds of payment processors. This smooth integration capacity is extensive and makes setting up payments pain-free. 

Auth is not limited to just the US, as it allows businesses to authenticate bank accounts in both Canada and the UK. Unsurprisingly, Auth is designed to be easily integrated into existing software like Plaid’s other products. Plaid Auth enables companies to securely gather the needed information for account information, protecting both themselves and their customers from fraudsters. 

Security

Plaid security is central to every service they provide. Plaid constantly works to provide its customers with the most secure solutions that remain up-to-date with financial security regulations. 

Additionally, Plaid makes it easy to prevent fraud and utilizes machine learning to provide excellent fraud assessments. Features such as envelope encryption and predictive insights enable companies to tackle fraud more efficiently. 

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Customer Experience

Plaid allows financial service providers to reach customers from all over the world by providing ID verification from countries all over the world. Additionally, Plaid makes it easy to onboard customers by providing a more personalized experience that meets their specific needs. 

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A more streamlined onboarding process allows businesses to boost their conversion rates and start their customer relationships on the right foot. The excellent security measures that come with Plaid protect customers from frustrating and expensive data breaches. Transparency is also at the heart of Plaid; it allows customers to understand how it uses their data and gives them control over it. 

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Easy to Use

Fortunately, companies can avoid jumping through tons of unnecessary hoops to access the many benefits of Plaid. It is designed to be incredibly easy to set up and for developers to use and adapt to their specific needs. 

Additionally, Plaid is straightforward to navigate for both businesses and their customers. This dramatically improves workflow for businesses and decreases the likelihood that customers will need to call for support to navigate through Plaid. Finally, thanks to Plaid’s many integrations with financial institutions and networks, it is a smooth process for customers and businesses from a variety of areas to interact with Plaid. 

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Alternatives to Plaid

While Plaid provides many great features, they may not fit everyone best. There are alternatives to Plaid that offer similar services.

Finicity

Much like Plaid, Finicity provides a wide variety of financial services tools, ranging from lending to payments; Finicity utilizes Mastercard’s extensive network to offer cutting-edge solutions. They work to provide small and medium businesses with smooth customer account opening and work to provide validated ACH payments. Reporting and decision-making are also easier with Finicity, which works to decrease risk. 

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MX

MX provides excellent financial data services and offers easy to use online banking options. They make it straightforward to securely connect financial accounts that are trusted by companies such as H&R Block. Data analysis is smooth, and APIs allow MX to provide a personalized experience for customers. Additionally, MX has connections with over 13,000 fintechs and banks. 

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Akoya

Connecting consumers and financial data is the core of Akoya. Trusted by financial institutions such as TD Bank and US Bank, it enables fast account opening and data access. Akoya offers additional services such as personal and business financial management. Similar to Plaid, Akoya offers developer-focused solutions that allow for a high degree of customization. 

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How Does Under Use Plaid?

With Under, your company gets access to Plaid Transactions, Auth, and Balance. This makes it incredibly easy to get accurate reporting about a customer’s transaction history and any potential risk factors that come with it. With Under leveraging Plaid Balance, you can be assured that customers have adequate funds and avoid costly NSF fees.

Together with Plaid Auth, it allows your business to authenticate customer bank accounts without having to go through a mountain of paperwork. 

Plaid is an essential component of what we do here at Under, but we leverage many other innovative solutions that enable you to provide the best underwriting and onboarding services for your customers. Combining a wide range of integrations from top-of-the-line companies such as Plaid, Middesk, Ekata, and others allows your business to have access to a wide variety of tools.

The strength of Under is that you can access this toolset without having to create several different accounts with each of these companies. Under is one-stop shopping for all of your underwriting needs. You can access great tools such as Plaid Balance, Plaid Auth, Plaid Transactions, and tons of other excellent tools with one login and one centralized system with Under. 

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