What Visa’s Acquisition of Plaid Really Means For Fintech

What Visa's acquisition of Plaid means for Fintech

Visa recently acquired Plaid for $5.3 Billion, which is almost twice its last valuation. What does Visa’s acquisition of Plaid really mean for Fintech?

The fintech market has been undergoing a shift behind the scenes for a few years now into a new trend called data unification. Businesses, in general, have been getting more keen about data utilization within their organizations. Big data analytics using AI and machine learning are helping more and more businesses make smarter decisions about growth, finance, and marketing while also reducing costs and improving customer experiences. Big data and data unification are shaping up to be one of the main commonalities among all successful business strategies in the coming decade – and this is the backbone of what has shaped Plaid’s uprising.

The API Market

With companies everywhere hungry to feed more relevant data into their analytics processes, there has been more and more need for developers who can connect different API’s to each other in order to communicate data back and forth. This is especially true for financial data surrounding transactions. eCommerce sites sharing data with retailers, social media influencers, and even similar businesses can help all parties involved gain a deeper insight into their customers and business strategies. This is all done to get more actionable data on how to improve business strategy and allow for a more seamless user experience. 

One of the biggest API challenges of the past decade was simplifying online payments and integrating these payments with traditional banking services. This is where Plaid came into play. 

What is Plaid?

At the end of the day, Plaid is a financial plumbing service. They help provide simplified pipeline connections so developers can facilitate payment pipelines and connect user’s bank accounts more easily. Basically, they simplify the ability for developers to enable communication between financial service API’s – something that was previously costly and difficult to accomplish. 

If you have ever used an application that uses payments or requires you to connect your bank account, it is pretty likely that Plaid was responsible for this API connection. Allowing developers to simplify the technical and sometimes complicated API communication schema between platforms and tools is a hot commodity right now, and is what is driving many rising fintech businesses to the top. When you think about the power of the technology it could be the answer to what Visa’s acquisition of Plaid means for Fintech

All trends eventually reach a tipping point, though, so what’s next?

It isn’t likely that the trend of interoperability and simplified pipeline connection will slow down anytime soon, so the growth of this market depends on the ingenuity of developers. Providing simplified payment services remains the most prominent area of fintech in the next decade, but it is likely these services will begin to take a new form due to the fact that banks are struggling to maintain consumer’s trust and also because Plaid has found so much success with their business model.

Some new ways to implement this type of technology can affect other sectors such as:

Real Estate

This type of technology could theoretically apply to real estate as well. Just how plaid is able to connect banking API’s for payment solutions, a simple pipeline solution that helped real estate agents allow digital escrow payments and signatures with simple and easy approval could be a game-changer for their workflow. 


Insurance companies could also benefit and provide a much smoother service with some improved payment pipelines and modernization. Providers could use this type of service to connect data from their customers and the associated businesses that help to provide smarter insurance claim services. Using this data-centric approach, they could save time, reduce arbitration, and dramatically improve the current tedious and sometimes unfair process many of us are forced to deal with. 


The use of digital currency remains in the spotlight and could become more of a mainstream trend sooner rather than later. Consumers are craving even more streamlined, safe, and fee-free methods of payment that does not include legacy banks at all. Banks will struggle to compare to this type of user experience when this technology is made available to the mainstream, which could be a giant leap forward for society as a whole. The missing piece of the puzzle is how to integrate the benefits of these digital assets and provide modern, usable, and now-ready mechanism that allows it to work in the real world. 

Connecting data pipelines will only allow for businesses in a variety of different sectors to work smarter, not harder. Our future will be data-driven, and Plaid’s success is foreshadowing an even bigger incoming trend of technology.

Daren Trousdell is an early stage investor, advisor and founder focused in the Fintech and Digital Media space.

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