Cash News
If you’ve ever connected your bank or credit card information to a mobile app or online service, it’s possible that you used Plaid to do it.
The company acts as an intermediary, providing a secure connection between your financial accounts and eligible apps without requiring you to download a separate app or create a separate account.
But what is Plaid banking, how does it work, and is it safe to use? Here’s everything you need to know.
What is Plaid, and how does it work?
Plaid is a that allows you to link your financial accounts to thousands of apps, many of which you may use to or other financial needs.
The company’s technology is integrated directly into its partner apps, making it easy for you to connect your accounts without having to use another app or website. Some of the well-known companies that use Plaid to link users’ financial accounts include , Coinbase, Robinhood, Betterment, , and H&R Block.
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Here’s what the process looks like:
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Select your financial institution: When you’re ready to link your account, you’ll search for your financial institution.
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Sign in: Once you’ve selected your bank or credit union, you’ll enter your login credentials with the financial institution.
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Choose the data you want to share: After logging in, you’ll choose which accounts and data you want to share with the app you’re linking your account to.
Once you’ve completed the connection, Plaid continues to maintain a secure connection and protect your personal data.
Which data does Plaid use?
The data Plaid collects depends on the app or service to which you’re trying to link your financial accounts. With that in mind, here are some of the data the company may use:
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Account holder details: This includes your name, address, phone number, and email address as they’re listed on the bank account or other financial account you’re trying to link.
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Account details: This may include your account name, account type, , and the current balance.
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Account transactions: For each transaction, it’ll include the date, type of transaction, amount, and description.
In addition to bank accounts, you may also be able to use Plaid to share information from personal loans, credit cards, and investment accounts.
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Which banks use Plaid?
Plaid offers connections to more than 12,000 financial institutions in the U.S., Canada, and Europe. That includes just about every national and regional bank, along with many smaller banks and credit unions. Examples include:
In general, smaller and are less likely to offer Plaid integration services.
Is it safe to give Plaid your bank login?
Plaid is used by millions of people across more than 8,000 apps and services. The company uses a variety of security measures to safeguard your information that either meet or exceed industry standards. Some of those measures include:
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End-to-end data encryption
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Multi-factor authentication
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Third-party security reviews
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Continuous monitoring
Additionally, the fintech company makes it clear that it neither sells nor shares your data with other companies and organizations. You also get to choose which data you want to share from your accounts, as well as how long you share it.
If you decide to stop using Plaid to link your financial accounts, you can request that the service delete your data from its systems entirely.
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Has Plaid ever been hacked?
To date, Plaid has never knowingly been hacked. In 2021, however, the company settled a class action lawsuit in which plaintiffs alleged that it violated customer data privacy.
More specifically, the lawsuit alleged that Plaid collected bank login information through software embedded in various financial apps, such as Venmo, Coinbase, and Cash App, without the users’ knowledge or consent and then used that information to access and collect years’ worth of confidential data, including transactions.
Plaid paid $58 million to settle the lawsuit and agreed to take steps to implement new practices to better safeguard consumer privacy.
Should you use Plaid?
If you plan to use an app that requires you to link your bank account or credit card information, you may already be using Plaid to keep your accounts connected.
If not, the service is a safe way to get that connection while keeping your personal details private and secure. What’s more, having your financial information linked to certain apps can make it easier to manage your financial life on the go.
If you decide to no longer use an app or service that partners with Plaid, though, you can unlink your account information and even request that Plaid delete your data from its systems.