Unless you still pay for things with paper checks and physical cash, you’ve probably had to connect your bank accounts with a digital financial service provider like Venmo or a budgeting tool like You Need a Budget. For financial platforms like those to work, you have to grant your bank permission to share your personal financial data with whatever app you’d like to use. Wondering what is Plaid? It's the essential link allowing secure data sharing between your bank and the apps you choose.
That’s where Plaid can help. You've probably seen the little pop-up whenever you've connected bank accounts to a third-party app, but what is Plaid?
Plaid is a popular data-sharing company that integrates with financial service providers to allow you to transfer your bank data to them. Believe it or not, your financial institution doesn’t really have the ability to easily communicate with another financial institution or other financial apps. Tools like Plaid are essential to enable you to plug sensitive financial information into apps and tools that can help you manage your money better.
If you’re wondering what is Plaid and why you might be prompted to use it, you’re in the right place. In this article, we’ll dive deeper into Plaid, how it works, and what you should know about using it.
Erika Taught Me
- Plaid is a fintech company that makes it easy to share sensitive financial data between a financial institution and financial service provider.
- Plaid uses world-class encryption protocols to protect users’ data and gives users control over how their data is shared.
- Plaid is automatically integrated with a number of different financial services, making it a seamless tool for you to use.
- Plaid is a safe and effective way to connect your bank accounts to financial apps that help you manage your money.
What is Plaid?
It is a fintech company that works with financial institutions and service providers to safely and securely transmit information about your financial accounts. It keeps your login credentials safe while following strict encryption protocols to keep your information secure. By doing this, they’ve made it easier for banks and financial platforms to communicate with one another.
One thing that sets it apart from other providers is that it gives you, the user, control over what data is shared. Every time you want to connect your bank account with a financial service provider, a Plaid bank verification window will pop up. Through that window, you’ll be asked to enter your bank login information and select the type of information you’d like to share.
After you’ve set up a connection, you can create a Plaid Portal account to periodically review which service providers have access to your financial data. If you want to revoke access, Plaid makes it easy for you to do so.
Plaid exists to make it easier for financial service providers and financial institutions to communicate with one another. Each uses its own systems and protocols to capture data, which means many financial institutions aren’t compatible with each other. Plaid essentially sits on top of financial institutions, making it possible for different banks to communicate with one another and with third-party financial services apps, like Venmo. This makes it easier for you to see all your financial accounts in one place, while making it as easy as possible to move it around the financial system.
Is Plaid safe?
Considered a secure platform for transferring sensitive financial data, Plaid takes pride in employing strict encryption protocols to actively ensure the safe movement of data across different platforms.
Additionally, a firm commitment ensures no selling or sharing of users' data without their express permission. Through the Plaid Portal, users can control access to their financial information and revoke permission if they choose to.
How does Plaid work?
When you're ready to link a bank account, like Venmo or Chime, a Plaid window pops up. The window will walk you through a process where you’ll select the financial institution you want to connect to.
After logging in and verifying credentials, actively authorize it to connect your bank with the desired financial provider. This grants you the opportunity to actively choose which financial information to share. If you have multiple accounts with one institution, actively choose specific ones to share data, not your entire history.
Furthermore, there is no need to create an account to use its services. It’s automatically integrated into a number of apps and has data-sharing agreements with over 12,000 financial institutions and 8,000 financial service providers.
Why did my bank stop linking to Plaid?
Despite being popular for integration, not everyone opts for this solution to link financial service providers with institutions. Notably, major banks like Chase may encounter challenges. If the service agreement concludes, your bank might cease linking, especially if the platform no longer accepts it.
In other instances, changes in data-sharing agreements may lead your bank to cease linking to Plaid. If this occurs, you may need to actively review a new terms of service agreement to reestablish the connection.
Related: What is autopay?
What bank is Venmo on Plaid?
While collaborating seamlessly, the process of linking Venmo and Plaid may necessitate additional steps. Specifically designed for peer-to-peer payments, Venmo operates in partnership with Bancorp Bank.
Automatic linking might not be possible. If it occurs, manually connect Venmo and Plaid by providing the required information.
- Venmo Partner Bank: The Bancorp Bank
- Partner Bank Address: 6100 S Old Village Pl, Sioux Falls, SD 57108
- Venmo account number
- Venmo routing number
Connect it directly to your PayPal account by adding it as you would a new bank account.
What bank is PayPal on Plaid?
To connect PayPal and Plaid you’ll need to make sure you’ve set up individual accounts with each platform. Create an account on Plaid’s website if you haven’t already.
Connect it to your PayPal like adding a new bank account through the account settings.