Everything to Know About Plaid, its Features and Limitations

The crypto space is expanding and trying to establish itself as a mainstream fintech. To make that happen, the industry needs solutions that could tend to crypto users’ needs. As a result, many solutions have emerged that make crypto usage easier than ever. Plaid is one such platform that makes digital assets more viable. 

Let’s quickly dig into its features and functionalities to know all about it.

Plaid: In a Nutshell

As a payment platform, Plaid connects traditional bank accounts with other applications. It acts as an intermediary and facilitates access to account information. While doing that, the platform ensures that only the required details are exchanged.

Plaid ensures that the security of the accounts and their information is never compromised. Besides that, it offers different features that bring ease to the usage of assets. For instance, it provides a virtual card service called Privacy that makes funding sources available to the users.

To ensure safety during online purchases, Privacy generates card numbers instantly. For potential users, it’s important to understand its safety implications. The team that created Plaid prioritized safety above everything else. Essentially, the application is the gateway for connecting different accounts.

Therefore, they created parameters that users could implement to ensure safety. The users, while connecting their accounts with third-party apps must keep the following things in mind. Users need to keep in mind that Plaid is a centralized platform and it adheres to all the security guidelines. 

Hence, they will have to use their bank login credentials for various purposes on this platform, mostly at the time of accessing and transmitting information from one point to another. However, users can rest assured that their details are safe with Plaid. The platform has done a great job of securing its users’ details. 

They have security protocols and privacy practices in place that safeguard the users’ information. Also, at this point, the users must understand how Plaid and Privacy maintain a seamless flow of details.  

A Peep Into Plaid’s Mechanism

Plaid adapts a simple and effective mechanism to maintain a secure and smooth flow of information. It directly debits the users’ funding source when they make transactions with a Privacy virtual card. However before this, it secures a safe connection with the bank account, and this is when Plaid plays a pivotal role. 

To secure a connection, Plaid asks users to log in to the bank’s portal via its own integration. Plaid views the bank account after doing a quick verification of credentials. It filters confidential information like account numbers and keeps them private. The Privacy app doesn’t separately store any information on its own. It takes all the details from Plaid.

Moreover, if the users want, they can easily change their login credentials whenever they want. The services of Privacy Virtual Cards are not impacted by making that change. 

Understand Plaid’s Usage For Banking

Plaid facilitates the integration of bank accounts with other apps. So far, more than 7000 financial companies have used Plaid’s banking API. They use it to access essential details like balances and transaction history. The following are some apps that use Plaid banking API.

Acorns– Acorns is a portfolio management application that offers a string of features. When it is connected with Plaid, it enables users to manage recurring investments and much more. 

Robinhood– Robinhood is a stock trading app that uses Plaid to collect essential banking information. It transfers funds directly from the bank account when the users start to invest.

Cash App– Cash App is a peer-to-peer money exchange app that uses Plaid for secure transfers. It transfers money safely from the banks to the Cash app.

Venmo– Venmo is also a peer-to-peer service that uses Plaid for fund transfers. 

No matter which app you use with Plaid, having a bank account is a must. Only then can the users make the most of this platform and other fintech apps. By using Plaid, users get to share the data in a very seamless fashion. For the other apps, using Plaid means circumventing many issues on their own.

This high-end payment platform makes the connection with bank accounts very easy. Without the presence of a program like Plaid, it’s very difficult to access banking details. Plaid provides the technological infrastructure on which centralized institutions can rely. In addition to this, it ensures compliance with all the norms while saving resources and ensuring security.

Plaid has made it clear that certain Multi-Factor Authentication protocols of banks aren’t compatible with its platform. Thus, users need to check these details with its customer service beforehand. With clarity about information, they can make the most of Plaid and its solutions. 

Anurag is working as a fundamental writer for The Coin Republic since 2021. He likes to exercise his curious muscles and research deep into a topic. Though he covers various aspects of the crypto industry, he is quite passionate about the Web3, NFTs, Gaming, and Metaverse, and envisions them as the future of the (digital) economy. A reader & writer at heart, he calls himself an “average guitar player” and a fun footballer.