What is Plaid?
Plaid is a financial technology company that provides APIs (application programming interfaces) and other tools for developers to build financial applications and services. Plaid's APIs allow developers to access financial data from banks, credit card companies, and other financial institutions, and to initiate transactions such as money transfers.
Plaid is like a bridge that connects financial institutions with developers.
Just as a bridge connects two land masses, Plaid connects financial institutions (such as banks and credit card companies) with developers who want to access financial data or build financial applications. Plaid provides the infrastructure and tools (such as APIs) that enable this connection, making it easier for developers to build financial products and services.
In other words
Plaid is a tool used by companies to allow for quick and easy payment via bank accounts.
Why is Plaid important?
It's one thing to know what Plaid is, but that is worthless if you don't know why you should know what Plaid in the first place. Let's break down the importance of this tech term based on two high level categories. We'll walk through an explanation as well as provide a score, 1-10, that shows you how much you should care about Plaid.
The first will be if you do not have a product yet. This means that you don't have a physical product. Maybe you're in the ideation phase, or maybe you're almost ready to start development. Whichever it is, we'll get into why Plaid is important and why you should or shouldn't care about it if you do not have a product.
If you don't have a product, you likely don't need to worry about Plaid just yet. If you are building a company that will accept payments, you should maybe consider familiarizing yourself with Plaid.
The second category is if you do have a live product. Maybe you just launched your business or maybe it's been live for years and you're continuing to improve its quality. Regardless of the scenario, if your product is live, Plaid carries a different weight.
You should care about Plaid if your product is accepting payments. If so, you should consider Plaid or its competitors to accept payment via bank accounts.
Examples of when to use Plaid
So you know what Plaid is, by definition. You know if you should care about it or not depending on your situation as a business/company/product. To dig in deeper, we will walk through some examples so we can make sure you really have a solid grasp on Plaid.
Here are three example use cases for Plaid:
- Personal finance management: Plaid can be used to build personal finance management applications that allow users to view and track their financial accounts (such as bank accounts, credit cards, and investment accounts) in one place.
- Fraud detection: Plaid's APIs can be used to access transaction data from financial accounts, which can be useful for detecting fraudulent activity.
- Credit risk assessment: Plaid's APIs can be used to access credit history and other financial data, which can be useful for assessing credit risk when lending money or making other financial decisions.
- Plaid is a financial technology company that provides APIs (application programming interfaces) and other tools for developers to build financial applications and services.
- If you don't have a product, you likely don't need to worry about Plaid just yet.
- You should care about Plaid if your product is accepting payments.
- Companies can use Plaid to accept payment from banks, identify fraud detection, and assess credit risk.