Plaid Launches New Fraud
Plaid CEO Zach Perret is expanding Plaids features into fraud prevention.
Since the earliest days of fintech, when PayPal was getting off the ground two decades ago, fraud has been a big, scary threat to startupsand the scale and severity of the problem have kept growing. In 2021, fraud attempts on merchants rose 140% compared with 2019, according to LexisNexis. Today Plaid, which helps fintech apps connect with consumers bank accounts and was valued at $13.4 billion in a fundraise last year, is announcing new features to try to help fintechs in their ongoing fraud battles.
In January 2022, Plaid paid $250 million to acquire Cognito, a nine-year-old identity verification company based in Oregon, and now its integrating Cognitos main product with its own bank-account-linking feature. Plaids new identity verification service will use data sources like Social Security numbers, drivers licenses and selfies to verify whether people are whom they say they are.
Heres what this new merging of Plaid features means for consumers: If youre signing up for a fintech app that uses Plaid for identity verification and account linking, youll only see a single series of questions to both verify your identity and connect your bank account, instead of being taken to a different screen to do each one. The combined steps typically take less than three minutes to complete, the company says.
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Are There Alternatives To Using Plaid
While there are alternative data transfer services, some companies may only use one particular vendor for translating data to and from different financial platforms. Additionally, some data transfer services may only operate in certain areas. If you wish to use a different data transfer platform, you can research what businesses work with the selected service online.
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What Is An Api
API = Application Programming Interface
An API is a feature of your website or application server which works between other sites and applications. Essentially, APIs talk to other applications to link up data, without having to leave your site, .
Plaids API allows countless applications to link bank accounts seamlessly. Developers simply request Plaids API keys and then create a free account to utilize these keys to link financial information safely and quicklyas consumers, developers, or curious experimenters.
Is Plaid A Service Which Collects Users Banking Login Information Safe To Use
I recently signed up for Privacy.com, which uses a service called Plaid to link a bank account. To do this, it requires the user to provide their banking username and password to a webpage from Plaid, not their bank. Then, Plaid accesses the users bank account with those credentials on the users behalf to get information. Plaid provides an API for websites and apps to easily access this banking information.
In addition to Privacy.com, plenty of other popular services use Plaid, including Venmo, Robinhood, and Coinbase.
Despite the popularity, this service appears to break two “fundamental” Internet security rules:
My confusion here is that all of these services are “legitimate”. None of them are scams they’re all providing a valuable service and have a solid reputation. Plaid has raised billions in funding!
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How Secure Is Plaid
Plaid is an account aggregator that will keep all of your financial data private, but we know you may still have the worry of security. Is your information secure from cyber attacks or breaches? Plaid makes sure to ensure that even malicious attempts at accessing and stealing assets or access are not successful. In order for them to do this, they rely on the following to upkeep strict security:
- MFA, or multi-factor authentication, is a way to keep your accounts login safe. It also prevents any unauthorized logins by using 2 or more factors to authenticate you.
- Data encryption can protect information to be safe from all areas of the transaction: banks, applications, and customers. Advanced Encryption Standard is used for any stored data, and Transport Layer Security protects all data that is in transit between apps.
- Plaid Security Testing doesnt leave anything to chance by using independent security testing. The company uses outside testing and a bug bounty program to ensure their platform stays ironclad.
- Plaid provides cloud infrastructure that was built with security in mind and utilizes the security technologies that have developed over decades to provide flexible and responsive protection.
What Happens If My Bank Account Is Not Listed
If your bank account is not listed in Plaid, you will need to enter your bank account information into the app manually. To do this, open the app, fill out your Plaid bank credentials, and tap on the Menu icon in the top-left corner of the screen. Then, select Settings and scroll down to the Bank Accounts section. Tap on Add a Bank Account and enter all of the required information.
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What Is Plaid Link
Just drop the following HTML snippet into your web app to get started:
< form id="link-form-id" method="GET"> < /form> < script src="https://cdn.plaid.com/link/v2/stable/link-initialize.js" data-client-name="Client Name" data-form-id="link-form-id" data-token="" data-product="auth" data-env="sandbox"> < /script>
How Does Plaid Maintain Your Privacy
You can control every single detail of your personal information through the Plaid platform. You decide what Plaid can supply to applications, including:
- Account and routing numbers
- Student loans
- Account profile information
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What Is Plaid And How Does It Work
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Where Plaid Is Used: Examples
Plaid has a variety of different use cases. It can be used to evaluate your credit, verify income or confirm sufficient funds for peer-to-peer payments, to name a few.
Some examples of institutions that use Plaid include:
NerdWallet:NerdWallets app allows you to track net worth, cash flow, credit score and more, but in order to get that information you have to link financial accounts through Plaid.
Venmo: The mobile app for peer-to-peer payments and money transfers requires you to verify a bank account through Plaid by entering a username and password for an online bank account. Venmo uses that to verify the account information and balance to see whether there is enough money to cover a transaction.
Chime: By providing Plaid with login credentials to an eligible external bank account, it may be possible to use it to fund your Chime bank account.
Petal and TomoCredit: When applying for the Petal credit card or Tomo Card, you may be required to link a bank account through Plaid during the application process to provide a more holistic view of your finances.
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Adding A Bank Account Manually Vs Adding With Plaid
ACH is a great way to help save on processing fees! You may be wondering, “how does a member setup ACH?” Before we get to the “how to”. let’s take a look at the difference:
PLAID is an instant verification that occurs by connecting a member’s bank online immediately by using a banking online username & password.
Two Step Verification is a manual process where the bank will deposit two micro deposits into a member’s account and then enter those on your profile page.
Here are the steps:
From the Member’s Online Portal, members have two options for adding their bank account:
Two Step Verification
Add Bank Account with Plaid
Included in your Triib subscription is instant ACH verification via Plaid. Plaid allows members to sign into their online banking and immediately link their account to Triib!
On the profile page, go to Payment Method > Bank Account > Add Bank Account with Plaid
Upon clicking Add Bank Account with Plaid, you’ll be asked to select your bank:
Once you select your provider, it’ll direct you to your online banking sign in. You’ll enter your username and password and then select which account you want to link to your Triib:
After you’ve entered this information and selected your account, ACH is verified and ready to roll!
What Can I Do With This App
Through an easy and intuitive dashboard, this native Salesforce application gives you access to a variety of customizable options for the bank data you need.Banking application development, integration, and implementation costs can get pretty high, which is why this easy-to-use app is that much more efficient. Itâs ready to go, whenever you are.
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How Does Plaid Work
Plaid works as an intermediate between banks and financial institutions or apps that need access to bank information. It offers a standardized API that allows banks to integrate their platforms without the need to build custom apps. Plaid uses end-to-end encryption to share personal and banking information in a secure way.
How Plaid Secures Your Info
With Plaid, you can control every single detail of your personal information. You decide what Plaid will give to applications including:
- Investment holdings
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Is Plaid Safe: Do You Need To Worry About Plaid
Plaid is one of many mobile apps out there to help us manage our finances. Whether its sending money to someone or creating a personal budget, smartphone apps are powerful enough to help us out.
However, most apps need you to connect your bank account to work efficiently. You are asked to share your login details, and that is precisely where you start getting nervous.
Plaid is just one such name you come across frequently while syncing your financial app with your bank. It also asks for your banking information and, therefore, has prompted many to be cautious. But what exactly is Plaid? What is its purpose? And most importantly, is Plaid safe?
Lets find out!
You Are In Control Of Your Data
Plaid puts you in complete control of your data. You can precisely choose what you want to share and with whom, right from your app.
Plaid doesnt use your data without permission.
Additionally, you have the Plaid portal to view all your connected apps and stored data on the platform. You can even choose to delete all your data on Plaid whenever you want.
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Why Does Plaid Ask To Connect To My Bank Account
Plaid connects to your bank account so that it can create a secure connection between your financial institution and the applications that need financial information. Plaid uses that connection to your bank account to pull out whatever data your financial applications need while still protecting your sensitive information. Plaid may pull out data like your account balance, or account numbers needed for deposit or withdrawal, but it does so using encrypted, protected tokens to shield your actual account information.
What Types Of Information Can Plaid Provide Lenders
Since we need to verify your identity, Plaid confirms your name, phone number, email, and physical address.
Furthermore, we can review credit and loan accounts, balances owed, transaction history, and interest rates. We can identify asset details, quantity, and cost basis if you have investment accounts such as retirement and brokerage.
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How Is My Bank Account Information Protected
At Coinbase we go to great lengths to keep all of your sensitive information safe.
Account numbers and routing numbers are stored using bank level AES-256 encryption on our servers. In addition, all traffic goes over SSL to prevent third parties from eavesdropping on your connection. Employee access is heavily restricted and we require background checks on all employees.
For US customers, you can verify your account in just a few minutes by entering your bank credentials. You may be familiar with this process if you’ve ever verified a bank account on Paypal or similar services. These banking credentials are never sent to Coinbase, but are shared with an integrated, trusted third-party, Plaid Technologies, Inc., to facilitate instant account verification. This service may store the provided credentials for verification purposes or use them on a per-transaction basis for fraud prevention, as well as help verify a sufficient balance is available to process your transaction.
You may change your online banking password at any time after instant verification. You may use a temporary password without losing access to Coinbase buy and sell services using the verified bank account.
If you’d prefer not to enter your credentials, please select Other Bank when adding your bank account to use our deposit verification method instead.
Why Plaid Asks To Connect To Your Bank
Plaid creates a secure connection between financial institutions and the applications that need financial information. It does this by linking with your bank account, which allows it to pull out data for you without exposing sensitive information. Plaid may pull out things like balances or numbers for deposits or withdrawals.
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Digital Identity Should Be A Big Business For Banks
Through this experience we can see that the bank also facilitates a connection to Intuit , which the bank has been quiet about . This likely indicates a more expansive strategy to give customers a full view of their data connections and allow customers to manage them from within the bank.
Bank of America example customer preference screen showing connected Fintech Apps
Bank of America
Awareness is Key
As I mentioned, Bank of America is not alone in providing customers access to view and manage their third-party data connections. Wells Fargo and several other large banks have buried similar controls in their existing online banking experiences and Plaid has begun offering customers a more enhanced version of these controls directly to customers via their own portal at My.Plaid.com. The Plaid hosted version not only allows the customers to see their connections across multiple banks, but it also shows more detailed information about what data is being shared with each third-party application across all Plaid connections.
The Evolving Industry
Why Is My Bank Not Listed By Your Bank Verification System
We’re sorry to hear of this trouble! You can use this link to see if your bank is supported by Plaid.
There might be a connectivity issue, or your bank might not be supported. Without successful connection to our automatic bank verification providers, we will unfortunately be unable to review your application further unless you’re a returning borrower. If your bank is supported but not working, please try again in a few days. It could be a temporary connectivity issue.If you are a first-time borrower with Fig and cannot complete automatic bank verification, I would recommend applying again in the future when our bank verification provider has connected with more banks. They’re adding new ones every day!If you have previously had Fig loans and cannot complete bank verification on a repeat application, please contact us at .
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Is Plaid Safe To Use
As with most companies that transfer financial information, Plaid says it takes the security of its customers data very seriously. Plaid uses encryption protocols like the Advanced Encryption Standard and Transport Layer Security when transmitting financial data. Knowing that your data is transmitted using these security settings may give you an extra layer of confidence.
In addition to following best-in-class security protocols when handling data, Plaid follows a number of other security best practices to make sure that your information remains safe. Plaids Trust and Safety page details that it:
- Uses multifactor authentication to further secure your account if your financial institution doesnt offer it
- Operates a bug bounty program to get even more eyes on security at Plaid
- Promises to never share your data without your permission, and to never sell or rent your information to other companies
- Allows you control over which companies have access to your data and what data is shared with each company.