How does Plaid make money?
Plaid makes money by providing companies withAPI-based productsfor an amount. These products can check account balances to ensure sufficient funds are available before a transfer, authorize bank accounts for new account funding, or verify the identity of a new user - all at the user's direction.
Plaid's starring role infintech ecosystemis to allow users to connect fintech apps they want to use to their existing financial accounts – and provide enriched data to help fintechs create features. Plaid's network includes connections to more than 12,000 financial institutions and 6,000 fintech companies. Plaid is also free for consumers. Companies pay for Plaid, not consumers.
It is important to note that Plaid does not make money by selling consumer data to third parties. In fact, Plaid only shares personal financial informationwith permissionof consumers. All API connections Plaid makes are made at the user's direction and personal financial information is never shared without permission.
Plaid makes money in three ways:
1. Disposable products:Some Plaid products, such as Auth and Identity, only need to be used once 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 through these APIs.
2. Products by use:Other types of plaid products, such as Balance, can be used repeatedly. In the case of Balance, a fintech company, at the user's direction, can check their balance to ensure they have enough funds to make an auto-recurring payment before it occurs. Plaid charges its customers each time they make one of these recurring requests in real time, but the fees are much lower than for one-off products.
3. Subscription Products:Another type of Plaid products creates an iterative connection between financial institutions and fintech apps. An example is transactions. Personal financial management apps use Transactions to access transaction history for an authorized, connected account, so users can get a clear view of their finances for things like saving and budgeting. Plaid charges subscription fees for these types of products, where customers pay per connected account per month.
