24 ms·

Visa Buys Plaid

538 points by coloneltcb 7y ago

curiousDog 7y ago
Curious what happens to options that are yet to vest when a company gets acquired like this? I had a potential offer from them and I'll be losing some sleep tonight :(
- smeyer 7y ago
  There's some flexibility, but often the unvested options in the acquired company are converted into unvested options in the acquiring company on the same schedule.
  - joewadcan 7y ago
    > often the unvested options in the acquired company are converted into unvested options in the acquiring company on the same schedule Yup, and I'd clarify that the new options aren't 1:1, but calculated based on some price-per-share of the acquired company.
  - tehlike 7y ago
    They are talking about potential offer. There is no agreement between the two sides.
- guynamedloren 7y ago
  It probably depends on the terms of the acquisition, but here's one data point: when the company I work for was acquired, all options were vested immediately and purchased by the acquiring company. So, options => cash.
coachtrotz 7y ago
Plaid is an incredible company and provides a valuable service to their tech partners. That said, their data collection practices are scary. They allow any developer using their software to swallow all of a users banking data - I would love to know how they police bad actors. (Source: https://plaid.com/legal/#privacy-statement https://plaid.com/legal/#privacy-statement)
- coachtrotz 7y ago
  Here is pertinent verbiage from the Plaid Privacy Statement. Information we collect from your financial accounts. The information we receive from the financial product and service providers that maintain your financial accounts varies depending on the specific Plaid services developers use to power their applications, as well as the information made available by those providers. But, in general, we collect the following types of identifiers, commercial information, and other personal information from your financial product and service providers: Account information, including financial institution name, account name, account type, account ownership, branch number, IBAN, BIC, and account and routing number; Information about an account balance, including current and available balance; Information about credit accounts, including due dates, balances owed, payment amounts and dates, transaction history, credit limit, repayment status, and interest rate; Information about loan accounts, including due dates, repayment status, balances, payment amounts and dates, interest rate, guarantor, loan type, payment plan, and terms; Information about investment accounts, including transaction information, type of asset, identifying details about the asset, quantity, price, fees, and cost basis; Identifiers and information about the account owner(s), including name, email address, phone number, date of birth, and address information; Information about account transactions, including amount, date, payee, type, quantity, price, location, involved securities, and a description of the transaction; and Professional information, including information about your employer, in limited cases where you’ve connected your payroll accounts. The data collected from your financial accounts includes information from all your accounts (e.g., checking, savings, and credit card) accessible through a single set of account credentials.
  - A4ET8a8uTh0 7y ago
    I never used Plaid, but it reads like information used in typical bank application for credit. Why would anyone willingly share this much without get something major in return? Does Plaid bank the underbanked? I am not sure what their appeal is.
    - nitrogen 7y ago
      They provide data for things that are like Mint (but not Mint itself).
brunoTbear 7y ago
Will be interesting to see the terms for the acquisition and see if Mary Meeker's last investment for KP was a winner or not! I'm cautiously optimistic for a good outcome for the Plaid folks here: last round was two years ago for $250M. Could they have been suffering $10M/month losses and are running out of money? Could be. No offense to Visa, but I don't think of them as the most innovative organization or one that is a sign of a "good outcome" for a company getting acquired. I can't think of a good exit to Visa, but I am open to being wrong on that one. Disclosures: worked at Stripe; dealt altogether more than I would have liked with Visa. Have no knowledge of Plaid's particulars. Edit: Visa and Mastercard were strategic investors in the C round. Curious what the competitive dynamics were that led to Visa grabbing the acquisition instead of MC. https://techcrunch.com/2019/09/16/plaid-announces-strategic-investment-from-mastercard-and-visa/ https://techcrunch.com/2019/09/16/plaid-announces-strategic-...
- jngreenlee 7y ago
  >competitive dynamics were that led to Visa grabbing the acquisition instead of MC Quite possibly got overbid in that case, which would be a good exit. MC is no slouch in this space.
- tempsy 7y ago
  > No offense to Visa, but I don't think of them as the most innovative organization Visa is a $434B company. I guess "innovative" is subjective but their valuation trajectory has looked like a high growth tech co over the past 5 years.
  - brunoTbear 7y ago
    That's fair. 3x valuation growth in the last 5 years is tech company level. More or less the same trajectory as GOOG and FB. It's not Stripe or Airbnb level growth, however.
    - tempsy 7y ago
      no one suggested that it was. my point is that it's clearly not a dying dinosaur of a company. if anything, Visa has too much power in our financial system as more transactions are non-cash and non-ACH based.
throwaway13000 7y ago
So, pertinent question. I want to move my account to a bank which gives me an API so I don't have to deal with Plaid or Mint. I.e. I want data privacy. I want to build a personal dashboard of where my money is going. Any suggestions?
- ErikAugust 7y ago
  Yeah, I'll second this. I figure we're talking headless browser scraping of online banking portals.
- apazzolini 7y ago
  You could try Actual [1], which stores your data locally. It does however go through Plaid. Would be interesting if there was an alternative option to screenscrape your online banking portal. [1] https://actualbudget.com/ https://actualbudget.com/
  - Operyl 7y ago
    However, it seems, that isn't even out yet: "Bank syncing is a critical feature that is coming soon!" You can manually import QFX/other standard formats though, but not all banks have exports of this, and it's very manual.
- findjashua 7y ago
  the only way atm would be to sign up for email notifications for any transactions, and parse the emails to get relevant data there are a few issues though: 1. some banks only send notifications for transactions that are over a certain amount (eg BofA is >$25) 2. the merchant name is arbitrarily cut-off (based on char length), so you don't really get reliable merchant info
  - sjg007 7y ago
    You could parse SMS too.
- bpicolo 7y ago
sgt 7y ago
At least we'll be able to say... They've gone into plaid!
- skocznymroczny 7y ago
  When I was a kid, I always laughed at the "F*, even in the future nothing works" quote. Now that I am a software engineer, I just get sad.
tempsy 7y ago
Have to say I'm not a fan of Plaid at all. Dark patterns galore. Absolutely no indication when you go through a Plaid flow that you're likely giving away much more than just the bare minimum account numbers to push money in/out of your bank account. Often, you're also giving away transaction data, identity, real-time balance, etc. There's no way to know prior to linking your account. I had high hopes that would have made things more transparent given the new CCPA laws that went into effect on the 1st but have not seen anything change. Edit: I think the 4D chess move here by Visa is the amount of data Plaid has. Bank transaction data from all types of transactions, not just Visa ones, is massively valuable. If people were concerned about Google acquiring Fitbit data I would be incredibly concerned about Visa basically buying all financial transaction data...the FTC should really investigate the acquisition.
- amluto 7y ago
  I’m personally a bit surprised that banks haven’t embraced U2F / WebAuthn as a way to disable Plaid.
  - erikig 7y ago
    On the contrary - Banks are falling over themselves to embrace Plaid, Finicity, Decisionlogic, Yodlee and all their ilk because failure to do so will result in the departure of their customers to a bank that supports all the new fintech apps that rely on these API providers.
    - tempsy 7y ago
      No, if anything banks have been catching on to Plaid and many have decided to stop supporting it e.g. Capital One has been on/off it for years. Banks aren't exactly happy that their API is basically scraping their website, for very valid reasons, including the customer's own security. If enough of the big banks decided they had enough of Plaid then it would present a massive existential threat to the business. If anything, I think that threat is a reason why they wanted an exit sooner rather than later.
deleted 7y ago
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cowpig 7y ago
Why is a duopoly like Visa/Mastercard allowed to make acquisitions in its own space?
- sithadmin 7y ago
  It's not a duopoly? In the US, AMEX and Discover aren't that difficult to use, and a fair amount of retailers accept in-house credit accounts and international creditors like JCB and UnionPay. Payment via debit networks is still very common, and low-tech forms of payment such as cash and checks are still acceptable in many use cases.
  - tempsy 7y ago
    Amex and Discover are different as those are closed-network. I think it's really hard to argue Visa/MC is not a duopoly. Unfortunately anti-trust enforcement in the US has been more political than anything.
    - metalliqaz 7y ago
      closed network?
      - awinder 7y ago
        You only get discover & Amex cards from those companies whereas Visa & MasterCard are networks that other people can “buy into”, ie your bank card (or credit card offered through a bank). IMO not super relevant to topic of competition, there’s 4 networks, the fact that two of them are structured differently doesn’t really have impacts on sellers & customers (other than that the two open networks are significant larger, visa & MasterCard)
        astura 7y ago
        This isn't quite true, I have a BVAA credit card that uses the AMEX payment network and I used to have an FIA Card Services credit card that used the AMEX payment network (the old Fidelity credit card)
vichu 7y ago
Looks like it's official: https://blog.plaid.com/plaid-and-visa/ https://blog.plaid.com/plaid-and-visa/
eerrt 7y ago
Do the early employees get a huge payout on their options?
- lowercased 7y ago
  Perhaps they'll just get visa gift cards... ;)
- ryanSrich 7y ago
  Even if they had really shitty agreements I bet they'll see something substantial. Reports are saying it was a 5.3 billion purchase price. That's a lot of money for 400 employees.
  - alecbenzer 7y ago
    Having 400 employees doesn't say much about how equity is distributed, though. E.g., (made up numbers, I know nothing about Plaid's comp specifically) if an employee gets 1 basis point over 4 years, that's 0.01% * $5.3 billion / 4 = $132,500, which combined with a startup salary might land you at around Google L4.
    - harryh 7y ago
      Unless plaid's equity structure was very unusual, early employees (at least in engineering) certainly received much much more than 1 basis point.
      - alecbenzer 7y ago
        Sure, but what's early? I don't think it's unheard of to get to O(1 basis point) at 100s of employees. I've seen an offer at a ~50 person company for 1-2 basis points.
- shamir 7y ago
  The early employees will get millions of dollars. This is 1)an unreasonably large amount of money for anybody to make or 2)nothing compared to the billions that the founders and venture investors will make.
masterjack 7y ago
Anyone know if this acquisition is a win for Plaid, or are they are just panicking before bank API middleware becomes commoditized (e.g. http://paysli.com/ http://paysli.com/ offering free authentication)
pilingual 7y ago
Visa invested in their Series C[0], so it seems unusual that they'd also acquire the company (why not acquire it back then?). Any ideas why this might have happened? Past examples? [0] https://www.crunchbase.com/organization/plaid#section-funding-rounds https://www.crunchbase.com/organization/plaid#section-fundin...
- bradstewart 7y ago
  They wanted to see what Plaid could accomplish with a little more money (and time) before spending a lot of money on the company. They liked what they saw and wanted full control. Or they realized Plaid was becoming too valuable to its competitors. Or they didn't have the cash available at the time. Or Plaid didn't want to sell at the time. Google Ventures participated in funding a number of companies that Google later acquired.
- JakeTheAndroid 7y ago
  Make sure it worked. Also, Plaid didn't have any data to buy when it first started. Now, they have tons of data. Had Plaid only been mildly successful, Visa likely would have just continued to let it run and get back its investment. But, now they have a decent amount of transaction data among other things, possibly making it more advantageous to own it outright than hope you can be one of many partners getting access to that data.
- erikig 7y ago
  It seems like their investment might have been a way to dip their toes into the water. It probably allowed VISA the ability to do their due diligence and assess whether the Plaid team would execute on the stated vision.
- thorgaardian 7y ago
  I’d speculate this is likely a result of one or both of the following: 1. A de-risking strategy. Investing early effectively discounts a future acquisition, but doesn’t go so far as to bet the farm on the businesses success. They would also gain very early and regular access to financials that would tell them if it’s worth the follow-up plunge or if it is on its way to bust. 2. The founders thought there was more room to grow independently, but wanted to keep Visa friendly and close to home. Best way to do that is to change an acquisition conversation into a partnership/investment conversation.
nikolay 7y ago
Plaid is terrible! Both Wells Fargo and Bank of America support API integration, but Plaid chooses to screen-scrape and does not work if you have 2FA enabled. Also, you can't even manually enter your bank information. In other words, even if you pay dearly to Plaid, you may block many users who use some of the top banks in the States! There is a bunch of services I cannot use because they rely solely on Plaid, and I'm not willing to disable 2FA! Maybe being Visa, it will make the whole service more meaningful if Visa pushes banks to integrate, because it's 2020, and giving your password for your bank to a third party, when there are APIs and OAuth/OpenID protocols available for banks.
- sithlord 7y ago
  pretty sure this is false, all my accounts are 2FA, and connected to a few different account aggregators (mint, personalcapital, etc) which i am prettty sure all use Plaid. Handles it fine.
  - maccam94 7y ago
    Mint does not use Plaid, they have an in-house integrations system.
    - avip 7y ago
      In house by intuit
  - thamer 7y ago
    My Wells Fargo account uses 2FA, and recently (November 2019) I was unable to connect a service to it through Plaid, getting an error that said my account type was not supported – or something along those lines. They may have fixed it by now, I haven't tried more recently.
    - dude3 7y ago
      You can remove 2FA, login with Plaid, and re add it. This worked for me.
j45 7y ago
This is too bad if they sell this prematurely
- whoisjuan 7y ago
  5.3 billion is not premature. That's a fucking jackpot for a company that only raised 350MM.
  - j45 7y ago
    I wish them well - could they have grown to be much more?
xj9 7y ago
i always hope that new exciting companies will work towards a sustainable business model that can exist without a buyout from some mega. i understand that its difficult to start a business, much less a sustainable one, but its sad to see such promising companies grow into a pitch instead of a business. maybe its a good thing i didn't get hired for their SLC office, because i would have quit over this.
- erikig 7y ago
  Out of curiousity, why would this acquisition be a reason to quit?
  - xj9 7y ago
    to me this move indicates weakness. its a fine exit for the early employees and the executive team, but there's no reason to sell if you have a solid business plan and a realistic vision for future profitability. maybe the only vision for the future they want to pursue involves some expensive investment or the business was built on massive debt that can only be paid of in this way. i want to be a part of building something that can survive as an independent entity. selling is an admission that this is either not a goal or not possible given the current position of the company. both of these are against my ethics. why should i stay at a company that has openly admitted that they are incapable or unwilling to pursue independence?
    - PragmaticPulp 7y ago
      At this point, what difference does it make? Visa can survive as an independent, profitable entity by your criteria. > but there's no reason to sell if you have a solid business plan and a realistic vision for future profitability. They had 5.3 billion reasons to sell. With an acquisition offer that high, it's not about the company's ability to survive independently. It's about doing what's in the best financial interests of the company and employees. > i want to be a part of building something that can survive as an independent entity. selling is an admission that this is either not a goal or not possible given the current position of the company. both of these are against my ethics. why should i stay at a company that has openly admitted that they are incapable or unwilling to pursue independence? Your distinction is a bit arbitrary. Plaid wasn't a fully independent company after they took significant money. Take a look at their board of directors. Only 2 out of 5 board members were Plaid executives. They had already "sold" part of the company when you applied.
xml4eva 7y ago
As a former Plaid employee with options that vested after I was shitcanned last year, this is some pretty welcome news.
- neonate 7y ago
  Congratulations. Can we have some inside stories please?
- sergiotapia 7y ago
  You’re anon, and I was always curious in terms of $$$ how much did you end up with? At what stage did you join and how many options did you get? Very rare to find real data online about this
  - jaggederest 7y ago
    I'm happy to post these things, without identifying companies. I'm sure you could find them on my resume or linkedin but there'll still be some ambiguity. Company A, 0.05% or 9000+ options vested, IPO, post-lockout sale at net ~$300k, was an early engineering employee Company B, <0.001% or 10000+ shares vested, very late engineering employee, not liquid yet, hypothetical value in low-mid 6 figures Make sure you do proper tax planning, taxes take an enormous bite, even with long term capital gains.
    - theNJR 7y ago
      What tax-planning resources did you find useful?
      - jaggederest 7y ago
        Consult an experienced tax attorney and CPA in your state. For a six figure sum the taxes make the cost of an attorney and CPA a rounding error.
    - jsh123 7y ago
      What do you mean by tax planning? If your company IPOs they will withhold shares for you. Only thing to watch for is depending on your income they might underwithold. There isn’t much more to it than that.
neonate 7y ago
http://archive.md/tQfZJ http://archive.md/tQfZJ
guelo 7y ago
Banking regulators should mandate open banking APIs and default-private, non-sellable transaction data. The fact that they don't means that they don't work for us, government has been turned into a tool to enable and encourage rent-seeking. The "deregulation" obsession in this country is turning us all into modern feudal serfs, we have no option but to toil in our Lords' properties without recourse.
mrfusion 7y ago
Plaid? Edit: I guess I’ll look up their homepage, and try to scroll through the marketing speak to figure it out. Seems like it would be nice if someone in the know could just tell us.
sdan 7y ago
Really don't like Plaid because they normalize phising. Surprised they aren't being condoned for this.
- cowpig 7y ago
  I think you mean "condemned"? To condone is to (often implicitly) approve of something that is ethically or morally dubious.
  - sdan 7y ago
    Yes, I think condemned is probably a better word!
yalogin 7y ago
Didn't know such a thing existed till now. They took the feature that mint and others built early on and turned it into a business. Awesome. Have no idea how good it is but a multibillion dollar exit is great.
- tommoor 7y ago
  Pretty sure Mint was built on Yodlee, a Plaid competitor
chrisblackwell 7y ago
FFS...can anyone run a business these days without XYZ company getting acquired.
node-bayarea 7y ago
For $5.3 Billion!!!
cliqueiq 7y ago
I see a lot of hate for Plaid here. I was my understanding that the only reason you would really ever use Plaid is because they were able give programmatic access to flat-rate fee ACH payments of basically any size. Obviously they were never something you could compare to Stripe. I wonder what's gonna happen with in the near future, especially considering Plaid was obviously stepping on the toes of the interchange-rates of the likes of Visa.
- jaf656s 7y ago
  Plaid provides an api to access transaction history and verify bank account ownership. They don't do ACH transfers.
  - cliqueiq 7y ago
    https://fin.plaid.com/articles/inside-ach-payments-with-stripe-and-plaid/ https://fin.plaid.com/articles/inside-ach-payments-with-stri... """To get started with ACH payments, you need a system that can connect you (the originator of the ACH transaction) with an Originating Depository Financial Institution (ODFI). Additionally, that system should be able to give updates on the status of the payment and give the developer an interface to authenticate, verify, and charge the user on demand. That’s where Stripe comes in. In January, the payments infrastructure giant debuted support for ACH payments through its platform alongside a partnership with us here at Plaid. Now, Stripe users can authenticate their customers through Plaid (or, if they must, micro-deposits) and then charge them through ACH.""" Am I misunderstanding something? EDIT: Okay so maybe they weren't doing the transfers, but they were certainly facilitating them and adding to the adoption of more ACH based payments (which means less credit-card payments). Same conflict of interest applies. What does Visa care about bank account verifications?
lemax 7y ago
Plaid and the broader explosion of white-label fintech infrastructure is great. Ultimately, it increases the number of companies that can enter the space and provide more competitive loan management tools, decision engines, identity verification, credit, wealth management, and so on to consumers. License the most complex/costly infrastructure, and then progressively swap out those vendor provided capabilities with internal platforms as they scale up (e.g. Revolut). There's still lots of problems to solve in the connectivity space that Plaid sits in, and the pursuit of some kind of unified open personal finance data standard isn't really on the table for those steering the big initiatives (e.g. FDX). This is mostly due to the variety of the data and number of players (tens of thousands of institutions). For more on that, this interview with Jeff Leathers, founder of Quovo, a similar company that was acquired by Plaid in 2019 is not a bad listen: https://medium.com/wharton-fintech/podcast-with-lowell-putnam-co-founder-and-ceo-of-quovo-421954a8962d https://medium.com/wharton-fintech/podcast-with-lowell-putna...
j_coder 7y ago
Who uses Plaid for ACH verification must start to think on alternatives. Visa blocked PayPal to growth its ACH payments a few years ago.
nailer 7y ago
Plaid is the scraping app US fintech startups had to use before https://teller.io https://teller.io (which uses the bank's own native APIs and therefore goes down way less) launched there. Good timing for the Plaid exit. Teller will eat their lunch.
m3kw9 7y ago
So visa has been plaid?
justinzollars 7y ago
Congratulations to the Plaid team!
iask 7y ago
Slightly off topic, but worth highlighting. Privacy virtual card use Plaid (well at least the last time I looked at it a few months back). The integration was extremely questionable. They were faking the bank’s login page. So when you enter your credentials, it wasn’t the actual banks page. There was a github issue opened, and after several followed up complaints they blocked further commenting and the removed then ticket. Subject of the ticket [plaid/link] privacy/security concerns (#68)
- dmitrygr 7y ago
  Collecting actual banking credentials is how plaid works, quite literally. One needs to be clinically insane to give your bank login creds to a third party voluntarily! I refuse to do business with any business that uses plaid and has no sane alternative to get bank account numbers (deposit two small amounts, three days later I tell you what they are) First time i saw it, i assumed the website had been hacked. I was actually more horrified when I found out that this was working as intended and some website wanted my bank password!
  - greenyoda 7y ago
    Indeed. Sharing your banking credentials with a third party almost certainly violates the terms of service you agreed on with your bank. If the third party has a security lapse and your bank account is drained, your bank might just claim that you authorized that transaction with your credentials, so it's a valid transaction and they won't shell out their own money to refund your loss. If in doubt, you should check your bank's terms of service for online banking.
  - pfranz 7y ago
    > I refuse to do business with any business that uses plaid and has no sane alternative to get bank account numbers (deposit two small amounts, three days later I tell you what they are) I'm a bit horrified this is still a thing, too. Doing this just confirms you have the correct account and routing number, so you can deposit and withdrawal. It won't allow you to see transactions--will it? FWIW, a minority of banks have "linked apps" that allow you to revoke access from the bank's website (some are clear they're restricting it to read-only access). But I'm not sure how consistent or widespread this kind of thing is. I doubt if you're offering a service like Plaid you could rely on only supporting these institutions.
spencerwgreene 7y ago
The WSJ updated the article this links to with the transaction price, $5.3 billion, "Visa to Pay $5.3 Billion for Fintech Startup." Maybe the HN title for this item should be updated?
pilingual 7y ago
Visa's presentation on the acquisition: https://www.scribd.com/document/442819888/Visa-Inc-to-Acquire-Plaid-Presentation https://www.scribd.com/document/442819888/Visa-Inc-to-Acquir...
- keithwhor 7y ago
  That's interesting... 200M accounts on Plaid. You gotta figure that's near the top of the S-Curve, right? Very close to 100% of the TAM in the US, and I would imagine that global expansion is costly given banking regulations in different regions. Visa already has the reputation / relationships to push forward there. Congrats to the team!
dugmartin 7y ago
I’m wondering if this will make Plaid’s pricing more or less opaque. Right now it’s go build it and then negotiate a rate. I think they would get a lot more uptake if they had upfront pricing.
- jamiequint 7y ago
  Nearly every large SaaS company has opaque pricing because price discrimination allows them to make far more money than they would if they had published prices.
sandGorgon 7y ago
Plaid scrapes bank credentials to enable challengers vs banks. VISA seems to be officially taking a stand with fintechs and challengers. So a bank can no longer piss off VISA & refuse scraping. But here's my bigger bet. Using this, VISA will launch a competitor to FICO.
- dpflan 7y ago
  It'll serve as a means for VISA to even more strategically target customers for its financial products/services.
hashyi 7y ago
Heard they were offering .1 percent for senior software engineers 6 months ago. Congrats guys! (source:https://www.teamblind.com/post/Plaid-acquired-by-Visa-for-5B-wBKnUPrz https://www.teamblind.com/post/Plaid-acquired-by-Visa-for-5B...)
- deleted 7y ago
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semerda 7y ago
Open Banking Standards in Commonwealth Countries will make the need for these scrapers redundant and limit the tools use to the US only. Never been a fan of scrapers. Very unreliable and a big security hole especially when MFA is used. I wonder if the tightening data privacy regulations (CCPA et al) forced them to sell or whether it was just a good sale opportunity.
semerda 7y ago
Congrats to Plaid! Overall, I'm no fan to these scrapers. Apart from the army of engineers (internal cost) required to maintain them, on the outside they sell a promise that is putting user's privacy at risk. This is especially prevalent in the bookkeeping space. Many "me too apps" stitch their services using Plaid to provide bookkeepers with bank feeds & statements for their clients. Other's use Xero's HubDoc (which Xero paid 70m for few years back) which basically does the same thing; scraping financial statements from many online services using a combination of tools and humans. It's a goldmine for hackers; plain text logins are stored in their database to practically many online accounts owned by business owners. Amazing to what degree people will go to to save few hours of labor each month.
ablekh 7y ago
Abstracting away from this specific case, it is IMO just another example of potential very significant and real risks of being reliant upon cloud or, more generally, technological platforms operated by potentially acquirable companies. While some acquired companies remain relatively independent and continue offering original products (in short-to-medium term), many don't [I have compiled a long list of case studies ...]. And if this (along with IT security) doesn't make most CTOs and/or CIOs to wake up in the middle of the night, then I don't know what does. Industry consolidation is IMO a pretty scary, but probably inevitable, trend. I think that the safest approach (sans some corner cases, e.g., a unique technology) is to build one company's technology platform on an "unacquirable" technology infrastructure (for the cloud, that would be AWS, Azure and, to somewhat lesser extent, GCP). Thoughts?
fulldecent2 7y ago
I support this big time. Plaid is a complete joke -- "give us your bank passwords and we'll validate your account". Banks are an even worse joke -- "20,000 logins today from one IP address, nope that's not a scam". Plaid customers are the worst. Like Transferwise, you cannot setup a business account with them without giving Plaid your business banking passwords. What company treasurer would allow that? Now that Visa is holding the bag this fixes two problems: 1. For customers, there is less risk that Visa will steal all your money than some "fintech" startup 2. For Plaid customers, they may realize Visa is buying this for the data and they may think of Visa as a competitor and not want to support them. --- Because "just give us your sudo password to install software" and "just give us your bank password" to send money is a thing... the obvious dumber people in the future will have to do "just sign this power of attorney to create an account with us."
- ct520 7y ago
  working with banks every day how in the heck did this pass. WOW
- sbmthakur 7y ago
  > Banks are an even worse joke -- "20,000 logins today from one IP address, nope that's not a scam". Banks (at least the big ones) often block aggregator traffic. This is resolved after speaking with them. The usual resolution is to whitelist specific IPs for massive traffic.
- mritchie712 7y ago
  do you really think a billion+ dollar company (Plaid) would "steal all your money"? That's a pretty silly statement. More realistic to think they have shitty security practices and could be hacked. FWIW, I worked at a large bank for over a decade and a fintech after that, the fintech had better security practices.
deleted 7y ago
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lngnmn 7y ago
Yet another MIM data collecting business. OK, congratulations.
jijji 7y ago
ACH services using any kind of API is and has been a pain today.... Im using intuit and they have no good API, it forces you to do a redirect similar to paypal. You basically have to write your own screen scrape tool to integrate with these people.
siliconc0w 7y ago
Plaid's product is absolutely absurd. Yes, please train your users to type their username and passwords into third party sites because they're given a legitimate looking sign-in box. US Banking infrastructure is so hopelessly bad that this is hack of a business is considered legitimate fin-tech. My wallet was stolen and before I realized it was gone and could cancel my CCs some dude made like six obviously fraudulent purchases. No Chip and Pin - zero verification. US banking needs to be legislatively hard-reset.
- craze3 7y ago
  Every time Plaid is mentioned on HN, people want to hate. My take is: don't use it if you're scared ? A few of my friends were talking about Plaid the other day, and I told them I like the company/product, but "many people on HN hate it." They were perplexed and when I explained it was because you guys were nervous about entering your bank password into a third-party (yet reputable) company's interface (that's encrypted), they wrote it off as "being paranoid." Can't say I disagree...
  - looperhacks 7y ago
    I've never used plaid, but in Germany there's a (I guess) similar service, Sofortüberweisung. My problem with these services is not that I don't trust them - I know how bad banking IT is, they can't be much worse. What bothers me, is that they teach users that it's okay to enter your credentials into third party sites, a recipe for disaster.
  - wolco 7y ago
    Saying the company interface is encrypted so it's safe shows how effective this attack can be. One of the attacks would present you with a login box. You thin this is plaid and it is encrypted so it's safe so you enter your username/password. It turns out to be a different third party. Not to worry the hacker interface is encrypted as well. Another attack surface opened up involves data breaches at plaid where company employee dumps access to everyone. It is probably the one thing you can do today that will at some point cause you lose money from your bank account. It is not even paranoid. It's a bad idea to leave your bank access codes with someone else. The less people understand how things work the more likely they are to trust it. This just opens up a new avenue for exploitation.
lejohnq 7y ago
From the documents at: https://investor.visa.com/events-calendar/Event-Details/2020/Visa-Inc-To-Acquire-Plaid/default.aspx https://investor.visa.com/events-calendar/Event-Details/2020... Deal is * $4.9B cash consideration * $400m retention equity as VISA RSUs
denkmoon 7y ago
There is a service like this in Australia, POLi. It's used almost exclusively to facilitate EFT transactions to vendors that can't use the regular channels like PayPal, local Banks, or Mastercard/Visa. ie. Porno, gambling, bitcoins, drugs. I learned about it by working in gambling. I cannot believe that people are OK with just giving their online banking details to a company. It's insane! but people are willing to use it because there is almost no other way of getting the product they want. Take the legislative risk out of handling those types of transactions, and shit like this will disappear.
Rainymood 7y ago
Guess they survived the 3.5 year security risk [0]... >7 points by Rainymood on June 21, 2016 [-] >I'm going to be really rude here (forgive me) but I feel like every time a security question comes up you dodge the question really hard. >I want to know one thing: If I log into your service with my bank credentials. Do you store these as plaintext files (or "encrypted" files of which you have the encryption key)? Yes/No. >Furthermore, congratulations! I've been trying to start something up like this in Europe but I feel like there are way more restrictions in Europe on banking data and this kind of third-party aggregation. Sorry for being so rude. Here is some previous news on Plaid on HN. * 2016-06-20 Fintech Firm Plaid Raises $44M (wsj.com)[1] * 2018-12-11 Fintech startup Plaid raises $250M at a $2.65B valuation (techcrunch.com)[2] * 2020-01-14 Visa Buys Plaid (wsj.com) [0] https://news.ycombinator.com/item?id=11939103 https://news.ycombinator.com/item?id=11939103 [1] https://news.ycombinator.com/item?id=18654880 https://news.ycombinator.com/item?id=18654880 [2] https://news.ycombinator.com/item?id=18654880 https://news.ycombinator.com/item?id=18654880
chrisbennet 7y ago
It would interesting to know if the employees saw any for that money.
e-clinton 7y ago
Plaid is trash. Doesn’t work with 2FA and is super unreliable. It’s crazy that a project with so many faults could be financially successful.
plumednom 7y ago
Sir, they've gone Plaid!!!! (Forgive the Spaceballs reference, but somebody had to do it)
kdot 7y ago
Still waiting for the Zelle API.
forgreens 7y ago
I wanna know how to work
forgreens 7y ago
Please I wanna know how to work
dsalzman 7y ago
"but that ignores the path dependency of one market using cash until recently, and the other receiving unsolicited Bank Americards 51 years ago. Once a job is done — and credit cards do their jobs very well — it takes a 10x improvement to get users to switch, and, in a three-sided network, that 10x is 10^3."

538 points by coloneltcb 7y ago

Curious what happens to options that are yet to vest when a company gets acquired like this? I had a potential offer from them and I'll be losing some sleep tonight :(

smeyer 7y ago
There's some flexibility, but often the unvested options in the acquired company are converted into unvested options in the acquiring company on the same schedule.
- joewadcan 7y ago
  > often the unvested options in the acquired company are converted into unvested options in the acquiring company on the same schedule Yup, and I'd clarify that the new options aren't 1:1, but calculated based on some price-per-share of the acquired company.
- tehlike 7y ago
  They are talking about potential offer. There is no agreement between the two sides.
guynamedloren 7y ago
It probably depends on the terms of the acquisition, but here's one data point: when the company I work for was acquired, all options were vested immediately and purchased by the acquiring company. So, options => cash.

coachtrotz 7y ago

Plaid is an incredible company and provides a valuable service to their tech partners. That said, their data collection practices are scary. They allow any developer using their software to swallow all of a users banking data - I would love to know how they police bad actors. (Source: https://plaid.com/legal/#privacy-statement https://plaid.com/legal/#privacy-statement)

coachtrotz 7y ago
Here is pertinent verbiage from the Plaid Privacy Statement. Information we collect from your financial accounts. The information we receive from the financial product and service providers that maintain your financial accounts varies depending on the specific Plaid services developers use to power their applications, as well as the information made available by those providers. But, in general, we collect the following types of identifiers, commercial information, and other personal information from your financial product and service providers: Account information, including financial institution name, account name, account type, account ownership, branch number, IBAN, BIC, and account and routing number; Information about an account balance, including current and available balance; Information about credit accounts, including due dates, balances owed, payment amounts and dates, transaction history, credit limit, repayment status, and interest rate; Information about loan accounts, including due dates, repayment status, balances, payment amounts and dates, interest rate, guarantor, loan type, payment plan, and terms; Information about investment accounts, including transaction information, type of asset, identifying details about the asset, quantity, price, fees, and cost basis; Identifiers and information about the account owner(s), including name, email address, phone number, date of birth, and address information; Information about account transactions, including amount, date, payee, type, quantity, price, location, involved securities, and a description of the transaction; and Professional information, including information about your employer, in limited cases where you’ve connected your payroll accounts. The data collected from your financial accounts includes information from all your accounts (e.g., checking, savings, and credit card) accessible through a single set of account credentials.
- A4ET8a8uTh0 7y ago
  I never used Plaid, but it reads like information used in typical bank application for credit. Why would anyone willingly share this much without get something major in return? Does Plaid bank the underbanked? I am not sure what their appeal is.
  - nitrogen 7y ago
    They provide data for things that are like Mint (but not Mint itself).

brunoTbear 7y ago

Will be interesting to see the terms for the acquisition and see if Mary Meeker's last investment for KP was a winner or not! I'm cautiously optimistic for a good outcome for the Plaid folks here: last round was two years ago for $250M. Could they have been suffering $10M/month losses and are running out of money? Could be. No offense to Visa, but I don't think of them as the most innovative organization or one that is a sign of a "good outcome" for a company getting acquired. I can't think of a good exit to Visa, but I am open to being wrong on that one. Disclosures: worked at Stripe; dealt altogether more than I would have liked with Visa. Have no knowledge of Plaid's particulars. Edit: Visa and Mastercard were strategic investors in the C round. Curious what the competitive dynamics were that led to Visa grabbing the acquisition instead of MC. https://techcrunch.com/2019/09/16/plaid-announces-strategic-investment-from-mastercard-and-visa/ https://techcrunch.com/2019/09/16/plaid-announces-strategic-...

jngreenlee 7y ago
>competitive dynamics were that led to Visa grabbing the acquisition instead of MC Quite possibly got overbid in that case, which would be a good exit. MC is no slouch in this space.
tempsy 7y ago
> No offense to Visa, but I don't think of them as the most innovative organization Visa is a $434B company. I guess "innovative" is subjective but their valuation trajectory has looked like a high growth tech co over the past 5 years.
- brunoTbear 7y ago
  That's fair. 3x valuation growth in the last 5 years is tech company level. More or less the same trajectory as GOOG and FB. It's not Stripe or Airbnb level growth, however.
  - tempsy 7y ago
    no one suggested that it was. my point is that it's clearly not a dying dinosaur of a company. if anything, Visa has too much power in our financial system as more transactions are non-cash and non-ACH based.

throwaway13000 7y ago

So, pertinent question. I want to move my account to a bank which gives me an API so I don't have to deal with Plaid or Mint. I.e. I want data privacy. I want to build a personal dashboard of where my money is going. Any suggestions?

ErikAugust 7y ago
Yeah, I'll second this. I figure we're talking headless browser scraping of online banking portals.
apazzolini 7y ago
You could try Actual [1], which stores your data locally. It does however go through Plaid. Would be interesting if there was an alternative option to screenscrape your online banking portal. [1] https://actualbudget.com/ https://actualbudget.com/
- Operyl 7y ago
  However, it seems, that isn't even out yet: "Bank syncing is a critical feature that is coming soon!" You can manually import QFX/other standard formats though, but not all banks have exports of this, and it's very manual.
findjashua 7y ago
the only way atm would be to sign up for email notifications for any transactions, and parse the emails to get relevant data there are a few issues though: 1. some banks only send notifications for transactions that are over a certain amount (eg BofA is >$25) 2. the merchant name is arbitrarily cut-off (based on char length), so you don't really get reliable merchant info
- sjg007 7y ago
  You could parse SMS too.
bpicolo 7y ago

sgt 7y ago

At least we'll be able to say... They've gone into plaid!

skocznymroczny 7y ago
When I was a kid, I always laughed at the "F*, even in the future nothing works" quote. Now that I am a software engineer, I just get sad.

tempsy 7y ago

Have to say I'm not a fan of Plaid at all. Dark patterns galore. Absolutely no indication when you go through a Plaid flow that you're likely giving away much more than just the bare minimum account numbers to push money in/out of your bank account. Often, you're also giving away transaction data, identity, real-time balance, etc. There's no way to know prior to linking your account. I had high hopes that would have made things more transparent given the new CCPA laws that went into effect on the 1st but have not seen anything change. Edit: I think the 4D chess move here by Visa is the amount of data Plaid has. Bank transaction data from all types of transactions, not just Visa ones, is massively valuable. If people were concerned about Google acquiring Fitbit data I would be incredibly concerned about Visa basically buying all financial transaction data...the FTC should really investigate the acquisition.

amluto 7y ago
I’m personally a bit surprised that banks haven’t embraced U2F / WebAuthn as a way to disable Plaid.
- erikig 7y ago
  On the contrary - Banks are falling over themselves to embrace Plaid, Finicity, Decisionlogic, Yodlee and all their ilk because failure to do so will result in the departure of their customers to a bank that supports all the new fintech apps that rely on these API providers.
  - tempsy 7y ago
    No, if anything banks have been catching on to Plaid and many have decided to stop supporting it e.g. Capital One has been on/off it for years. Banks aren't exactly happy that their API is basically scraping their website, for very valid reasons, including the customer's own security. If enough of the big banks decided they had enough of Plaid then it would present a massive existential threat to the business. If anything, I think that threat is a reason why they wanted an exit sooner rather than later.

deleted 7y ago

[deleted]

cowpig 7y ago

Why is a duopoly like Visa/Mastercard allowed to make acquisitions in its own space?

sithadmin 7y ago
It's not a duopoly? In the US, AMEX and Discover aren't that difficult to use, and a fair amount of retailers accept in-house credit accounts and international creditors like JCB and UnionPay. Payment via debit networks is still very common, and low-tech forms of payment such as cash and checks are still acceptable in many use cases.
- tempsy 7y ago
  Amex and Discover are different as those are closed-network. I think it's really hard to argue Visa/MC is not a duopoly. Unfortunately anti-trust enforcement in the US has been more political than anything.
  - metalliqaz 7y ago
    closed network?
    - awinder 7y ago
      You only get discover & Amex cards from those companies whereas Visa & MasterCard are networks that other people can “buy into”, ie your bank card (or credit card offered through a bank). IMO not super relevant to topic of competition, there’s 4 networks, the fact that two of them are structured differently doesn’t really have impacts on sellers & customers (other than that the two open networks are significant larger, visa & MasterCard)
      - astura 7y ago
        This isn't quite true, I have a BVAA credit card that uses the AMEX payment network and I used to have an FIA Card Services credit card that used the AMEX payment network (the old Fidelity credit card)

vichu 7y ago

Looks like it's official: https://blog.plaid.com/plaid-and-visa/ https://blog.plaid.com/plaid-and-visa/

eerrt 7y ago

Do the early employees get a huge payout on their options?

lowercased 7y ago
Perhaps they'll just get visa gift cards... ;)
ryanSrich 7y ago
Even if they had really shitty agreements I bet they'll see something substantial. Reports are saying it was a 5.3 billion purchase price. That's a lot of money for 400 employees.
- alecbenzer 7y ago
  Having 400 employees doesn't say much about how equity is distributed, though. E.g., (made up numbers, I know nothing about Plaid's comp specifically) if an employee gets 1 basis point over 4 years, that's 0.01% * $5.3 billion / 4 = $132,500, which combined with a startup salary might land you at around Google L4.
  - harryh 7y ago
    Unless plaid's equity structure was very unusual, early employees (at least in engineering) certainly received much much more than 1 basis point.
    - alecbenzer 7y ago
      Sure, but what's early? I don't think it's unheard of to get to O(1 basis point) at 100s of employees. I've seen an offer at a ~50 person company for 1-2 basis points.
shamir 7y ago
The early employees will get millions of dollars. This is 1)an unreasonably large amount of money for anybody to make or 2)nothing compared to the billions that the founders and venture investors will make.

masterjack 7y ago

Anyone know if this acquisition is a win for Plaid, or are they are just panicking before bank API middleware becomes commoditized (e.g. http://paysli.com/ http://paysli.com/ offering free authentication)

pilingual 7y ago

Visa invested in their Series C[0], so it seems unusual that they'd also acquire the company (why not acquire it back then?). Any ideas why this might have happened? Past examples? [0] https://www.crunchbase.com/organization/plaid#section-funding-rounds https://www.crunchbase.com/organization/plaid#section-fundin...

bradstewart 7y ago
They wanted to see what Plaid could accomplish with a little more money (and time) before spending a lot of money on the company. They liked what they saw and wanted full control. Or they realized Plaid was becoming too valuable to its competitors. Or they didn't have the cash available at the time. Or Plaid didn't want to sell at the time. Google Ventures participated in funding a number of companies that Google later acquired.
JakeTheAndroid 7y ago
Make sure it worked. Also, Plaid didn't have any data to buy when it first started. Now, they have tons of data. Had Plaid only been mildly successful, Visa likely would have just continued to let it run and get back its investment. But, now they have a decent amount of transaction data among other things, possibly making it more advantageous to own it outright than hope you can be one of many partners getting access to that data.
erikig 7y ago
It seems like their investment might have been a way to dip their toes into the water. It probably allowed VISA the ability to do their due diligence and assess whether the Plaid team would execute on the stated vision.
thorgaardian 7y ago
I’d speculate this is likely a result of one or both of the following: 1. A de-risking strategy. Investing early effectively discounts a future acquisition, but doesn’t go so far as to bet the farm on the businesses success. They would also gain very early and regular access to financials that would tell them if it’s worth the follow-up plunge or if it is on its way to bust. 2. The founders thought there was more room to grow independently, but wanted to keep Visa friendly and close to home. Best way to do that is to change an acquisition conversation into a partnership/investment conversation.

nikolay 7y ago

Plaid is terrible! Both Wells Fargo and Bank of America support API integration, but Plaid chooses to screen-scrape and does not work if you have 2FA enabled. Also, you can't even manually enter your bank information. In other words, even if you pay dearly to Plaid, you may block many users who use some of the top banks in the States! There is a bunch of services I cannot use because they rely solely on Plaid, and I'm not willing to disable 2FA! Maybe being Visa, it will make the whole service more meaningful if Visa pushes banks to integrate, because it's 2020, and giving your password for your bank to a third party, when there are APIs and OAuth/OpenID protocols available for banks.

sithlord 7y ago
pretty sure this is false, all my accounts are 2FA, and connected to a few different account aggregators (mint, personalcapital, etc) which i am prettty sure all use Plaid. Handles it fine.
- maccam94 7y ago
  Mint does not use Plaid, they have an in-house integrations system.
  - avip 7y ago
    In house by intuit
- thamer 7y ago
  My Wells Fargo account uses 2FA, and recently (November 2019) I was unable to connect a service to it through Plaid, getting an error that said my account type was not supported – or something along those lines. They may have fixed it by now, I haven't tried more recently.
  - dude3 7y ago
    You can remove 2FA, login with Plaid, and re add it. This worked for me.

j45 7y ago

This is too bad if they sell this prematurely

whoisjuan 7y ago
5.3 billion is not premature. That's a fucking jackpot for a company that only raised 350MM.
- j45 7y ago
  I wish them well - could they have grown to be much more?

xj9 7y ago

i always hope that new exciting companies will work towards a sustainable business model that can exist without a buyout from some mega. i understand that its difficult to start a business, much less a sustainable one, but its sad to see such promising companies grow into a pitch instead of a business. maybe its a good thing i didn't get hired for their SLC office, because i would have quit over this.

erikig 7y ago
Out of curiousity, why would this acquisition be a reason to quit?
- xj9 7y ago
  to me this move indicates weakness. its a fine exit for the early employees and the executive team, but there's no reason to sell if you have a solid business plan and a realistic vision for future profitability. maybe the only vision for the future they want to pursue involves some expensive investment or the business was built on massive debt that can only be paid of in this way. i want to be a part of building something that can survive as an independent entity. selling is an admission that this is either not a goal or not possible given the current position of the company. both of these are against my ethics. why should i stay at a company that has openly admitted that they are incapable or unwilling to pursue independence?
  - PragmaticPulp 7y ago
    At this point, what difference does it make? Visa can survive as an independent, profitable entity by your criteria. > but there's no reason to sell if you have a solid business plan and a realistic vision for future profitability. They had 5.3 billion reasons to sell. With an acquisition offer that high, it's not about the company's ability to survive independently. It's about doing what's in the best financial interests of the company and employees. > i want to be a part of building something that can survive as an independent entity. selling is an admission that this is either not a goal or not possible given the current position of the company. both of these are against my ethics. why should i stay at a company that has openly admitted that they are incapable or unwilling to pursue independence? Your distinction is a bit arbitrary. Plaid wasn't a fully independent company after they took significant money. Take a look at their board of directors. Only 2 out of 5 board members were Plaid executives. They had already "sold" part of the company when you applied.

xml4eva 7y ago

As a former Plaid employee with options that vested after I was shitcanned last year, this is some pretty welcome news.

neonate 7y ago
Congratulations. Can we have some inside stories please?
sergiotapia 7y ago
You’re anon, and I was always curious in terms of $$$ how much did you end up with? At what stage did you join and how many options did you get? Very rare to find real data online about this
- jaggederest 7y ago
  I'm happy to post these things, without identifying companies. I'm sure you could find them on my resume or linkedin but there'll still be some ambiguity. Company A, 0.05% or 9000+ options vested, IPO, post-lockout sale at net ~$300k, was an early engineering employee Company B, <0.001% or 10000+ shares vested, very late engineering employee, not liquid yet, hypothetical value in low-mid 6 figures Make sure you do proper tax planning, taxes take an enormous bite, even with long term capital gains.
  - theNJR 7y ago
    What tax-planning resources did you find useful?
    - jaggederest 7y ago
      Consult an experienced tax attorney and CPA in your state. For a six figure sum the taxes make the cost of an attorney and CPA a rounding error.
  - jsh123 7y ago
    What do you mean by tax planning? If your company IPOs they will withhold shares for you. Only thing to watch for is depending on your income they might underwithold. There isn’t much more to it than that.

neonate 7y ago

http://archive.md/tQfZJ http://archive.md/tQfZJ

guelo 7y ago

Banking regulators should mandate open banking APIs and default-private, non-sellable transaction data. The fact that they don't means that they don't work for us, government has been turned into a tool to enable and encourage rent-seeking. The "deregulation" obsession in this country is turning us all into modern feudal serfs, we have no option but to toil in our Lords' properties without recourse.

mrfusion 7y ago

Plaid? Edit: I guess I’ll look up their homepage, and try to scroll through the marketing speak to figure it out. Seems like it would be nice if someone in the know could just tell us.

sdan 7y ago

Really don't like Plaid because they normalize phising. Surprised they aren't being condoned for this.

cowpig 7y ago
I think you mean "condemned"? To condone is to (often implicitly) approve of something that is ethically or morally dubious.
- sdan 7y ago
  Yes, I think condemned is probably a better word!

yalogin 7y ago

Didn't know such a thing existed till now. They took the feature that mint and others built early on and turned it into a business. Awesome. Have no idea how good it is but a multibillion dollar exit is great.

tommoor 7y ago
Pretty sure Mint was built on Yodlee, a Plaid competitor

chrisblackwell 7y ago

FFS...can anyone run a business these days without XYZ company getting acquired.

node-bayarea 7y ago

For $5.3 Billion!!!

cliqueiq 7y ago

I see a lot of hate for Plaid here. I was my understanding that the only reason you would really ever use Plaid is because they were able give programmatic access to flat-rate fee ACH payments of basically any size. Obviously they were never something you could compare to Stripe. I wonder what's gonna happen with in the near future, especially considering Plaid was obviously stepping on the toes of the interchange-rates of the likes of Visa.

jaf656s 7y ago
Plaid provides an api to access transaction history and verify bank account ownership. They don't do ACH transfers.
- cliqueiq 7y ago
  https://fin.plaid.com/articles/inside-ach-payments-with-stripe-and-plaid/ https://fin.plaid.com/articles/inside-ach-payments-with-stri... """To get started with ACH payments, you need a system that can connect you (the originator of the ACH transaction) with an Originating Depository Financial Institution (ODFI). Additionally, that system should be able to give updates on the status of the payment and give the developer an interface to authenticate, verify, and charge the user on demand. That’s where Stripe comes in. In January, the payments infrastructure giant debuted support for ACH payments through its platform alongside a partnership with us here at Plaid. Now, Stripe users can authenticate their customers through Plaid (or, if they must, micro-deposits) and then charge them through ACH.""" Am I misunderstanding something? EDIT: Okay so maybe they weren't doing the transfers, but they were certainly facilitating them and adding to the adoption of more ACH based payments (which means less credit-card payments). Same conflict of interest applies. What does Visa care about bank account verifications?

lemax 7y ago

Plaid and the broader explosion of white-label fintech infrastructure is great. Ultimately, it increases the number of companies that can enter the space and provide more competitive loan management tools, decision engines, identity verification, credit, wealth management, and so on to consumers. License the most complex/costly infrastructure, and then progressively swap out those vendor provided capabilities with internal platforms as they scale up (e.g. Revolut). There's still lots of problems to solve in the connectivity space that Plaid sits in, and the pursuit of some kind of unified open personal finance data standard isn't really on the table for those steering the big initiatives (e.g. FDX). This is mostly due to the variety of the data and number of players (tens of thousands of institutions). For more on that, this interview with Jeff Leathers, founder of Quovo, a similar company that was acquired by Plaid in 2019 is not a bad listen: https://medium.com/wharton-fintech/podcast-with-lowell-putnam-co-founder-and-ceo-of-quovo-421954a8962d https://medium.com/wharton-fintech/podcast-with-lowell-putna...

j_coder 7y ago

Who uses Plaid for ACH verification must start to think on alternatives. Visa blocked PayPal to growth its ACH payments a few years ago.

nailer 7y ago

Plaid is the scraping app US fintech startups had to use before https://teller.io https://teller.io (which uses the bank's own native APIs and therefore goes down way less) launched there. Good timing for the Plaid exit. Teller will eat their lunch.

m3kw9 7y ago

So visa has been plaid?

justinzollars 7y ago

Congratulations to the Plaid team!

iask 7y ago

Slightly off topic, but worth highlighting. Privacy virtual card use Plaid (well at least the last time I looked at it a few months back). The integration was extremely questionable. They were faking the bank’s login page. So when you enter your credentials, it wasn’t the actual banks page. There was a github issue opened, and after several followed up complaints they blocked further commenting and the removed then ticket. Subject of the ticket [plaid/link] privacy/security concerns (#68)

dmitrygr 7y ago
Collecting actual banking credentials is how plaid works, quite literally. One needs to be clinically insane to give your bank login creds to a third party voluntarily! I refuse to do business with any business that uses plaid and has no sane alternative to get bank account numbers (deposit two small amounts, three days later I tell you what they are) First time i saw it, i assumed the website had been hacked. I was actually more horrified when I found out that this was working as intended and some website wanted my bank password!
- greenyoda 7y ago
  Indeed. Sharing your banking credentials with a third party almost certainly violates the terms of service you agreed on with your bank. If the third party has a security lapse and your bank account is drained, your bank might just claim that you authorized that transaction with your credentials, so it's a valid transaction and they won't shell out their own money to refund your loss. If in doubt, you should check your bank's terms of service for online banking.
- pfranz 7y ago
  > I refuse to do business with any business that uses plaid and has no sane alternative to get bank account numbers (deposit two small amounts, three days later I tell you what they are) I'm a bit horrified this is still a thing, too. Doing this just confirms you have the correct account and routing number, so you can deposit and withdrawal. It won't allow you to see transactions--will it? FWIW, a minority of banks have "linked apps" that allow you to revoke access from the bank's website (some are clear they're restricting it to read-only access). But I'm not sure how consistent or widespread this kind of thing is. I doubt if you're offering a service like Plaid you could rely on only supporting these institutions.

spencerwgreene 7y ago

The WSJ updated the article this links to with the transaction price, $5.3 billion, "Visa to Pay $5.3 Billion for Fintech Startup." Maybe the HN title for this item should be updated?

pilingual 7y ago

Visa's presentation on the acquisition: https://www.scribd.com/document/442819888/Visa-Inc-to-Acquire-Plaid-Presentation https://www.scribd.com/document/442819888/Visa-Inc-to-Acquir...

keithwhor 7y ago
That's interesting... 200M accounts on Plaid. You gotta figure that's near the top of the S-Curve, right? Very close to 100% of the TAM in the US, and I would imagine that global expansion is costly given banking regulations in different regions. Visa already has the reputation / relationships to push forward there. Congrats to the team!

dugmartin 7y ago

I’m wondering if this will make Plaid’s pricing more or less opaque. Right now it’s go build it and then negotiate a rate. I think they would get a lot more uptake if they had upfront pricing.

jamiequint 7y ago
Nearly every large SaaS company has opaque pricing because price discrimination allows them to make far more money than they would if they had published prices.

sandGorgon 7y ago

Plaid scrapes bank credentials to enable challengers vs banks. VISA seems to be officially taking a stand with fintechs and challengers. So a bank can no longer piss off VISA & refuse scraping. But here's my bigger bet. Using this, VISA will launch a competitor to FICO.

dpflan 7y ago
It'll serve as a means for VISA to even more strategically target customers for its financial products/services.

hashyi 7y ago

Heard they were offering .1 percent for senior software engineers 6 months ago. Congrats guys! (source:https://www.teamblind.com/post/Plaid-acquired-by-Visa-for-5B-wBKnUPrz https://www.teamblind.com/post/Plaid-acquired-by-Visa-for-5B...)

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semerda 7y ago

Open Banking Standards in Commonwealth Countries will make the need for these scrapers redundant and limit the tools use to the US only. Never been a fan of scrapers. Very unreliable and a big security hole especially when MFA is used. I wonder if the tightening data privacy regulations (CCPA et al) forced them to sell or whether it was just a good sale opportunity.

semerda 7y ago

Congrats to Plaid! Overall, I'm no fan to these scrapers. Apart from the army of engineers (internal cost) required to maintain them, on the outside they sell a promise that is putting user's privacy at risk. This is especially prevalent in the bookkeeping space. Many "me too apps" stitch their services using Plaid to provide bookkeepers with bank feeds & statements for their clients. Other's use Xero's HubDoc (which Xero paid 70m for few years back) which basically does the same thing; scraping financial statements from many online services using a combination of tools and humans. It's a goldmine for hackers; plain text logins are stored in their database to practically many online accounts owned by business owners. Amazing to what degree people will go to to save few hours of labor each month.

ablekh 7y ago

Abstracting away from this specific case, it is IMO just another example of potential very significant and real risks of being reliant upon cloud or, more generally, technological platforms operated by potentially acquirable companies. While some acquired companies remain relatively independent and continue offering original products (in short-to-medium term), many don't [I have compiled a long list of case studies ...]. And if this (along with IT security) doesn't make most CTOs and/or CIOs to wake up in the middle of the night, then I don't know what does. Industry consolidation is IMO a pretty scary, but probably inevitable, trend. I think that the safest approach (sans some corner cases, e.g., a unique technology) is to build one company's technology platform on an "unacquirable" technology infrastructure (for the cloud, that would be AWS, Azure and, to somewhat lesser extent, GCP). Thoughts?

fulldecent2 7y ago

I support this big time. Plaid is a complete joke -- "give us your bank passwords and we'll validate your account". Banks are an even worse joke -- "20,000 logins today from one IP address, nope that's not a scam". Plaid customers are the worst. Like Transferwise, you cannot setup a business account with them without giving Plaid your business banking passwords. What company treasurer would allow that? Now that Visa is holding the bag this fixes two problems: 1. For customers, there is less risk that Visa will steal all your money than some "fintech" startup 2. For Plaid customers, they may realize Visa is buying this for the data and they may think of Visa as a competitor and not want to support them. --- Because "just give us your sudo password to install software" and "just give us your bank password" to send money is a thing... the obvious dumber people in the future will have to do "just sign this power of attorney to create an account with us."

ct520 7y ago
working with banks every day how in the heck did this pass. WOW
sbmthakur 7y ago
> Banks are an even worse joke -- "20,000 logins today from one IP address, nope that's not a scam". Banks (at least the big ones) often block aggregator traffic. This is resolved after speaking with them. The usual resolution is to whitelist specific IPs for massive traffic.
mritchie712 7y ago
do you really think a billion+ dollar company (Plaid) would "steal all your money"? That's a pretty silly statement. More realistic to think they have shitty security practices and could be hacked. FWIW, I worked at a large bank for over a decade and a fintech after that, the fintech had better security practices.

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lngnmn 7y ago

Yet another MIM data collecting business. OK, congratulations.

jijji 7y ago

ACH services using any kind of API is and has been a pain today.... Im using intuit and they have no good API, it forces you to do a redirect similar to paypal. You basically have to write your own screen scrape tool to integrate with these people.

siliconc0w 7y ago

Plaid's product is absolutely absurd. Yes, please train your users to type their username and passwords into third party sites because they're given a legitimate looking sign-in box. US Banking infrastructure is so hopelessly bad that this is hack of a business is considered legitimate fin-tech. My wallet was stolen and before I realized it was gone and could cancel my CCs some dude made like six obviously fraudulent purchases. No Chip and Pin - zero verification. US banking needs to be legislatively hard-reset.

craze3 7y ago
Every time Plaid is mentioned on HN, people want to hate. My take is: don't use it if you're scared ? A few of my friends were talking about Plaid the other day, and I told them I like the company/product, but "many people on HN hate it." They were perplexed and when I explained it was because you guys were nervous about entering your bank password into a third-party (yet reputable) company's interface (that's encrypted), they wrote it off as "being paranoid." Can't say I disagree...
- looperhacks 7y ago
  I've never used plaid, but in Germany there's a (I guess) similar service, Sofortüberweisung. My problem with these services is not that I don't trust them - I know how bad banking IT is, they can't be much worse. What bothers me, is that they teach users that it's okay to enter your credentials into third party sites, a recipe for disaster.
- wolco 7y ago
  Saying the company interface is encrypted so it's safe shows how effective this attack can be. One of the attacks would present you with a login box. You thin this is plaid and it is encrypted so it's safe so you enter your username/password. It turns out to be a different third party. Not to worry the hacker interface is encrypted as well. Another attack surface opened up involves data breaches at plaid where company employee dumps access to everyone. It is probably the one thing you can do today that will at some point cause you lose money from your bank account. It is not even paranoid. It's a bad idea to leave your bank access codes with someone else. The less people understand how things work the more likely they are to trust it. This just opens up a new avenue for exploitation.

lejohnq 7y ago

From the documents at: https://investor.visa.com/events-calendar/Event-Details/2020/Visa-Inc-To-Acquire-Plaid/default.aspx https://investor.visa.com/events-calendar/Event-Details/2020... Deal is * $4.9B cash consideration * $400m retention equity as VISA RSUs

denkmoon 7y ago

There is a service like this in Australia, POLi. It's used almost exclusively to facilitate EFT transactions to vendors that can't use the regular channels like PayPal, local Banks, or Mastercard/Visa. ie. Porno, gambling, bitcoins, drugs. I learned about it by working in gambling. I cannot believe that people are OK with just giving their online banking details to a company. It's insane! but people are willing to use it because there is almost no other way of getting the product they want. Take the legislative risk out of handling those types of transactions, and shit like this will disappear.

Rainymood 7y ago

Guess they survived the 3.5 year security risk [0]... >7 points by Rainymood on June 21, 2016 [-] >I'm going to be really rude here (forgive me) but I feel like every time a security question comes up you dodge the question really hard. >I want to know one thing: If I log into your service with my bank credentials. Do you store these as plaintext files (or "encrypted" files of which you have the encryption key)? Yes/No. >Furthermore, congratulations! I've been trying to start something up like this in Europe but I feel like there are way more restrictions in Europe on banking data and this kind of third-party aggregation. Sorry for being so rude. Here is some previous news on Plaid on HN. * 2016-06-20 Fintech Firm Plaid Raises $44M (wsj.com)[1] * 2018-12-11 Fintech startup Plaid raises $250M at a $2.65B valuation (techcrunch.com)[2] * 2020-01-14 Visa Buys Plaid (wsj.com) [0] https://news.ycombinator.com/item?id=11939103 https://news.ycombinator.com/item?id=11939103 [1] https://news.ycombinator.com/item?id=18654880 https://news.ycombinator.com/item?id=18654880 [2] https://news.ycombinator.com/item?id=18654880 https://news.ycombinator.com/item?id=18654880

chrisbennet 7y ago

It would interesting to know if the employees saw any for that money.

e-clinton 7y ago

Plaid is trash. Doesn’t work with 2FA and is super unreliable. It’s crazy that a project with so many faults could be financially successful.

plumednom 7y ago

Sir, they've gone Plaid!!!! (Forgive the Spaceballs reference, but somebody had to do it)

kdot 7y ago

Still waiting for the Zelle API.

forgreens 7y ago

I wanna know how to work

forgreens 7y ago

Please I wanna know how to work

dsalzman 7y ago

"but that ignores the path dependency of one market using cash until recently, and the other receiving unsolicited Bank Americards 51 years ago. Once a job is done — and credit cards do their jobs very well — it takes a 10x improvement to get users to switch, and, in a three-sided network, that 10x is 10^3."