Plaid, Stripe execs air grievances over new aggregation service

Just a few hours after Stripe announced a new account aggregation service on Wednesday, the well-known account aggregator Plaid cried foul, accusing Stripe of dishonestly obtaining information used in its development.

Stripe's Financial Connections allows Stripe's business clients to connect directly to the bank accounts of their customers. This system can be used for transaction verification, risk management and other financial services. That's a similar goal of Plaid's products, which connect more than 6,000 apps and 12,000 financial institutions to authenticate users for a variety of services. 

After Stripe's announcement, Plaid CEO Zachary Perret tweeted to Jay Shah, Stripe's business lead, criticizing the product, drawing a response from Shah.

On Wednesday and Thursday, Stripe and Plaid execs continued arguing over the products on Hacker News, a YCombinator discussion forum.  Plaid did not provide comment on the dispute to American Banker, and Stripe didn't return a request for comment. A Plaid spokesperson confirmed that Plaid has an existing partnership with Stripe dating back several years.

This public argument demonstrates the value of the market for account-to-account payments and aggregation. There's a huge and expanding opportunity for technology that eases e-commerce payment processing and access to financial services that span multiple bank accounts, third-party apps and merchants.  

The global e-commerce market is projected to grow by 55.3% between 2021 and 2025, reaching $8.3 trillion in transaction value, according to FIS/Worldpay research released in late March. 

Other innovations can benefit from account aggregation and application programming interface connections to bank accounts. One example is open banking, or the sharing account information among banks and third parties to make access to multiple financial products easier. Another is embedded finance, which uses behind-the-scenes bank connections to support access to financial services from nonfinancial companies.

The market for digital bank account connections is getting crowded. Plaid's competitors in data aggregation include Finicity (a unit of Mastercard), Yodlee, MX and Visa, which unsuccessfully tried to buy Plaid, then purchased the open banking technology firm Tink. 

Plaid is also building a payments business by recruiting an ecosystem of partners with payment expertise. 

As part of their existing relationship, Stripe's customers use Plaid Auth to allow their consumers to connect financial accounts via Plaid Link. Stripe serves as the payment processor for bank transfers, funding or account-to-account transfers via ACH. Plaid has similar integrations with other payment processor partners.