Plaid ups the ante against Stripe

Plaid announced that it’s launching products that offer identity verification, making account linking and identity verification a simultaneous process. The company is also moving into ACH payments.

Why should we care?
The launch of these new products comes right on the heels of Stripe’s new bank-linking API—meaning both companies are moving into each other’s territory. At first glimpse, Plaid’s move could be seen as an emotionally driven retaliation against Stripe’s API launch. (Plaid’s CEO accused Stripe of light corporate espionage, though he later backtracked.) But Ryan Falvey, Managing Partner at Financial Venture Studio, thinks these new products are the result of pure economics. As large, private fintechs, both Plaid and Stripe are hoping to court Wall Street, and they need recurring revenue products to back up a narrative of promising growth and stability—and justify their valuations. In addition, Falvey explains, Plaid goes after fintechs and banks, while Stripe targets startups and SMBs. “There are very different core segments they’re going after,” he said. Both Stripe and Plaid’s new expansions also reduce pain points for their respective client bases. “What we've heard time and time again from our customers is that they would love for us to start tackling other parts of the onboarding flow that… introduce a lot of friction for end users,” said Jean-Denis Grèze, Plaid’s CTO. By obviating the need for a client to engage with a separate vendor for ID verification, Plaid is satisfying its clients—and potentially swelling its ranks in the coming months.