How does Plaid make money?
Plaid makes money by providing businesses with API-based products in exchange for a fee. These products enable things like checking account balances to ensure there are sufficient funds before a transfer, authorizing bank accounts for new account funding, or verifying a new user’s identity—all of which are done at the direction of the user.
Plaid’s main role in the fintech ecosystem is to allow users to connect fintech apps that they want to use to their existing financial accounts—and provide enriched data to help fintechs create features. Plaid’s network covers connections to over 12,000 financial institutions and 6,000 fintech companies. Also, Plaid is free for consumers. Businesses pay for Plaid, not consumers.
It’s important to note that Plaid does not make money by selling consumer data to third parties. In fact, Plaid only shares personal financial data with permission from consumers. All of the API connections Plaid makes are done at the direction of the user, and personal financial data is never shared without permission.
Plaid makes money in three main ways:
1. One-time-use products: Some of Plaid’s products, like Auth and Identity, only need to be used one time in the new customer onboarding process to connect accounts and verify identity. Plaid charges its customers a one-time fee for each successful request made using these APIs.
2. Per-use products: Other types of Plaid products, such as Balance, may be used repeatedly. In the case of Balance, at the direction of the user, a fintech company might check their balance to ensure they have enough funds to make an automatic recurring payment before it happens. Plaid charges its customers each time they make one of these repeated, real-time requests, but the fee is much lower than for the one-time-use products.
3. Subscription products: Another type of Plaid’s products create a repeated connection between financial institutions and fintech apps. One example is Transactions. Personal financial management apps use Transactions to access a transaction history for an authorized, connected account so it can help users get a clear picture of their finances for things like savings and budgeting. For products like this, Plaid charges a subscription fee where customers pay per connected account per month.
