The news: Data-transfer platform Plaid has added customer identification and fraud detection to its technology stack, stepping closer to offering a complete onboarding solution for its clients, per American Banker.
More on this: In addition to offering data aggregation through screen-scraping, Plaid will now offer identification verification and fraud detection services through application program interfaces (APIs).
Two Plaid clients, H&R Block and cross-border payment company Uphold, currently use the two technologies. Plaid expects to make them available to more clients later this year. The features offer a suite of products to banks and fintechs that are in high demand—new customer onboarding, know your customer (KYC) and anti-money laundering (AML) services, identity verification, and fraud detection.
Stoking a fire: The additional features add fuel to the fire currently raging between Plaid and payment software provider Stripe.
The convergence of two worlds: The moves by both companies take them from partners to competitors. Previously, the two joined forces to allow customers to complete money transfers without needing to deal with routing numbers or other information. While the partnership still appears to be intact, it’s clear that it may no longer be needed, as both companies are able to facilitate payments, verify identities, and validate transactions.
Both companies saw the opportunity to provide their customers with a complete solution, providing services starting with onboarding, through the verification process, to the actual transfer of money. Plaid’s Chief Technology Office, Jean-Denis Greze, elaborated a bit more on Plaid’s thinking:
The big takeaway: It’s not surprising that the two companies would eventually cross paths. As fintech companies grow and search for the next best offering, reaching for an adjacent service allows the company to offer a more comprehensive solution and connect with more end users. With Plaid and Stripe stepping on each others’ market share, the shakeout will remain heated, leading both companies to put their best foot forward—thereby benefiting their customers.