Early this week, Visa Inc. (NYSE:V) announced that it would acquire fintech startup Plaid for $5.3 billion. This shows the company’s intent to expand into the mobile digital economy. Plaid is used by a quarter of Americans with bank accounts to connect their bank accounts to the mobile financial app.
Plaid’s APIs vital in financial applications
Plaid technology makes application programming interfaces (APIs) that are increasingly becoming vital in apps such as Venmo, Acorns, Betterment, Transferwise, and Chime. The tech also supports cryptocurrency-based companies such as Abra and Coinbase by enabling users to transfer funds effortlessly from a bank account to a digital wallet and converting the dollars into cryptocurrency.
There is a shift in buying and spending on smart devices that support powerful financial apps. Therefore the acquisition of Plaid by Visa is seen as a way for the company to establish itself in the digital space.
Plaid’s APIs are very vital in online banking, and they aid in connecting customers to encrypted databases to show stock price information and account balances. According to Visa, the number of internet-enabled consumers who use fintech applications to begin the money movement increased significantly last year compared to 2018. For instance, Plaid managers around 11,000 bank clients which cover almost 20 million consumer accounts.
Crypto exchanges integrating Plaid
Cryptocurrencies and blockchain platforms have shown how money can easily move across digital networks. This has eliminated the cumbersome procedures and a lot of paperwork, thus minimizing the time it takes to settle transactions.
For instance, Coinbase has integrated Plaid in its platform to protect client information. According to the exchange, banking details of the customer are not sent to Coinbase, but instead, they are shared with Plaid to ensure instant account verification. Plaid has the potential of storing the provided information for purposes of verification and can use them for fraud protection as well as verification of balances to process transactions.
Plaid co-founder and CEO Zach Perret indicated that their mission is to make money easier for the customer, and they are delighted to get the chance with Visa to deliver that on a global scale.