While it might be overlooked, Plaid is one of the best payments gateways going and the $10-billion-plus startup is looking to move into new territory.
The firm has announced new tools for identity verification – a fundamental part of any ecommerce transaction – and fraud prevention. The additions to its portfolio mean it is competing directly with payments giant Stripe.
“We’re introducing Plaid Identity Verification (IDV) and Monitor – a complete verification, AML, and KYC compliance solution available in early access starting today,” the company says. “We’ve heard from many of you that having a frictionless identity verification experience is critical across a variety of use cases: from account opening and funding, to trading and lending.”
Fintech forever
The expansion, announced at the Plaid Forum event, is notable because Stripe recently announced Financial Connections, letting its customers connect direct to their customer’s bank accounts.
The two fintech behemoths are increasingly moving into each other’s main catchments, setting them up for a pretty epic battle.
Speaking to TechCrunch, Plaid’s head of identity Alain Meier said that account connectivity has traditionally been its core focus and adding more fintech companies – such as Robinhood and Chime – is all part of the plan.
“This ultimately helps build trust and security for the entire ecosystem as more people onboard to new fintech apps and services,” Meier said. “That’s why we are expanding our platform to now include identity verification and new tools for fast and easy account funding and disbursements.”
The battle to be the dominant fintech company has been raging for many years, as Stripe, Plaid, and other startups look to take on incumbent banks at their own game.
Facilitating payments on the internet and offering merchant services is an incredibly lucrative business – and competitive one.
When Stripe introduced Financial Connections, Plaid’s cofounder Zach Perret accused the company of copying its products in a now-deleted tweet, drawing a rebuttal from Stripe’s leadership.
Patrick shared this note internally about the Financial Connections/Plaid kerfuffle. Glad to put it behind us, and I’m look forward to continued vibrant competition in fintech (which customers benefit from!) in the future. pic.twitter.com/LOnlGIPDdqMay 6, 2022
Ultimately, there is almost certainly enough space in the online payments and services market for two or more huge companies to coexist.
Plaid explicitly making moves into Stripe’s core areas, and vice versa, is a good thing for companies and customers for their services.
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