Visa and Plaid Abandon Merger After Antitrust Division’s Suit to Block

https://www.justice.gov/opa/pr/visa-and-plaid-abandon-merger-after-antitrust-division-s-suit-block

by 0xedb • 6 years ago

610 275 6 years ago

nawgz• 6 years ago

I think this was well played by the gov't, the idea of Visa and Plaid merging is really clearly going to reduce competition in the payments space

paxys5• 6 years ago

It would have gone through had Visa's CEO not been so honest at the time of the merger announcement saying that they intended to use Plaid's data to get a leg up on their competitors.

The DOJ cited Visa CEO Al Kelly’s description of the deal as an “insurance policy” to neutralize a “threat to our important US debit business.”

CamelCaseName• 6 years ago

Such a poor comment from Kelly that I almost wonder if it was intentional.

ska3• 6 years ago

It would seem a CEO would have other, less public, tools to torpedo a deal if they wanted to, no?

mjevans• 6 years ago

This angle makes sense if they wanted regulators to more closely examine the acquisition target.

renewiltord• 6 years ago

Could be attempting a balance of convincing shareholders and not come out as just eating the upstart.

Dwolb2• 6 years ago

Maybe he wanted to tank the deal once they figured out Plaid scrapes financial portals instead of integrates with them.

dexterous5• 6 years ago

Hubris enables people, especially "smart" people, to do things that look really stupid in hindsight.

odiroot• 6 years ago

But is it securities fraud?

chaorace2• 6 years ago

I don't even think it's a data issue. He literally says they bought Plaid because they're a threat. That's textbook anti-competitive behavior and a big smoking gun when it comes to anti-trust cases.

paxys5• 6 years ago

They said both I believe. Them having access to all their competitors' data through Plaid was a big concern when the acquisition was announced.

valtism• 6 years ago

I'm not informed when it comes to anti-competitive legislation, but don't companies like Google do this sort of thing all the time?

etaioinshrdlu2• 6 years ago

Maybe they weren’t as astutely aware of the antitrust political wave we seem to be in. It feels like 5 or 10 years ago this merger would have happened regardless of comments like this. I think after the 08 recession there was little appetite for anything that could make business less effective, and big business loves mergers.

pjg3• 6 years ago

OK. But will DoJ disallow the acquisition of finicity by Mastercard ? VISA and Mastercard follow each other. I'm waiting to hear the verdict on finicity acquisition by MC

breck• 6 years ago

I'm surprised by this. I used to work in Foster City.

The joke on the campus was that VISA stood for "Very Inconspicuous Spy Agency".

You'd think that there wouldn't be this kind of miscommunication in the chain of command.

All jokes aside, I'm very curious to check out Plaid now because I didn't pay attention when it was independent and Visa is a *very* smart organization, so Plaid must be something special.

ryanwhitney• 6 years ago

It’s like oauth except you type your password for site A into a box on site B’s domain

Pretty wild it even exists

toomuchtodo4• 6 years ago

It is a hack around regulatory failure to mandate this functionality at finance firms (both Congress and the Fed have failed in this regard). The Fed's instant payments product (FedNow [1]) goes live in 2023, which is going to put downward pressure on Visa's debit business. The Fed only began to move on instant payments when pressured by Congress [2] (who didn't want smaller banks held hostage by Early Warning System's "Zelle" product, which is operated by a consortium of the nation's largest banks).

Europe mandated this functionality (PSD2) [3]. With instant payments and if regulations required banks to offer this functionality, Plaid's value would evaporate.

[1] https://www.frbservices.org/financial-services/fednow/index....

[2] https://www.paymentsjournal.com/timeline-the-feds-real-time-...

[3] https://en.wikipedia.org/wiki/Payment_Services_Directive

madamelic• 6 years ago

Plaid must be something special.

It's not so much that Plaid is "something special" but that US banks are stuck in the 1950's technologically.

Plaid shouldn't exist. It only exists because banks refuse to create open APIs for others to integrate with.

With that said, Plaid has done a fantastic job.

rizpanjwani2• 6 years ago

Never used Plaid but didn't they require your banking credentials and also didn't have a very secure mechanism for storing them?

ceejayoz• 6 years ago

It only exists because banks refuse to create open APIs for others to integrate with.

Mostly true, but both Capital One and Citibank have OAuth APIs. It's lovely.

vageli• 6 years ago

Mercury bank seems to be a standout in this regard, promoting themselves as a "full stack" bank.

pg_bot2• 6 years ago

This seems to be changing. Nacha (the organization that governs ACH) has been developing open APIs so that more organizations can get access to the ACH network without any dirty hacks. I would expect to see a rise in the number of personal finance applications over the next few years due to this fact.

https://www.nacha.org/content/available-apis https://www.nacha.org/content/phixius

jamestimmins3• 6 years ago

Whatever you think about Visa or this merger, this would be a major disappoint to Plaid's team members who thought they were in for a huge financial windfall.

If that applies to anyone here, my sympathies and best of luck figuring out what's next for Plaid. Hopefully the morale hit isn't too big on the team.

hnxs• 6 years ago

I wonder if employees with equity will see any portions of the breakup fees as some sort of bonus.

perpetualpatzer• 6 years ago

Was there a breakup fee on this one? I'd expect it's pretty standard to waive that when it's due to unforeseen regulatory obstacles.

paxys5• 6 years ago

They'll get some $$$ out of it, and I have no doubt that they have a solid future as an independent company. The fintech sector is red hot right now. Heck they might even be able to catch the next IPO wave.

RobRivera2• 6 years ago

SPAC SPAC SPAC SPAC SPAC

save_ferris• 6 years ago

The vast majority of tech workers that receive equity stakes in pre-IPO/acquisition companies don't ever see any financial windfall from their stakes. These guys will be just fine.

garyrichardson• 6 years ago

Agreed, except for one point.

Please don't call it a windfall. Anyone in that company that would have seen life changing amounts of money has likely put incredible effort and hard work into making this happen.

jamestimmins3• 6 years ago

Interesting, I just thought a windfall meant "a lot of money at once", but it looks like you're right that it implies luck. So agreed, a different word would be more accurate here.

roflc0ptic• 6 years ago

I mean, nobody reasonably joins a startup and expects to make buku bucks. It’s “unexpected good fortune” from my perspective, and certainly seems to qualify as a windfall.

supernova87a3• 6 years ago

Well, maybe it isn't a "windfall" to someone who lives in the tech world and comes to expect such good fortune and thinks their effort should be rewarded in an outsized way. I'm sure we think it's deserved in a relative sense.

But it is most definitely a windfall to the rest of the world (even the rest of the country), who work equally hard, under worse conditions, for their entire lives and cannot even hope to earn say 1/5 the wealth that a tech worker can accumulate after his/her first job.

To have a payday of millions of $ fall out of the sky, for toiling the same as others trying to make a living, yet also being lucky to be in the right place and the right time to have it rewarded.

AlexandrB• 6 years ago

This comment strikes a nerve with me - perhaps because it's "saying the quiet part loud". I thought the typical goal of hackers and startups was to "change the world" and "make a difference". How does selling to Visa accomplish those things? Isn't expressing sympathy with Plaid's staff for not getting a payout effectively saying "sorry that you might actually have to deliver on the lofty promises this time"?

It's also kind of indicative of how small startup ambitions have become. Acquisition has become a measure of success, not failure.

Operyl• 6 years ago

To be fair, Visa would’ve had the partnerships with banks to really push for standard API access to various banks. Plaid works by giving them your username and password in most flows (although some banks like Chase finally have an authorization flow without MITM).

JMTQp8lwXL• 6 years ago

The rank-and-file employees that work for companies like this have other goals, like buying houses and saving for retirement, it's not a single dimension. Yes, they want to help the world but not at the expense of themselves and their own financial future.

cheriot• 6 years ago

Plaid has ~500 employees with normal lives and financial goals. There are start-ups out there with a real chance to change the world, but I think it gets over played as a form of recruiting and media strategy.

paxys5• 6 years ago

There is no "typical goal" in tech or anything else. Different people want different things in life.

jamestimmins3• 6 years ago

This makes it sound like something dirty.

Tech workers want to buy homes and go on vacations just like everyone else. That's a good thing. They had an opportunity to make a lot of money making banking services easier for everyone; that's awesome and should be encouraged.

madeofpalk• 6 years ago

I thought the typical goal of hackers and startups was to "change the world" and "make a difference"

I care so little about "changing the world" or "making a difference". Those things don't pay the rent.

rconti2• 6 years ago

I've been through 1.5 IPOs and 1 acquisition.

In only one of those cases, did I join the company expecting an imminent-ish liquidity event. One hit me out of nowhere. Regardless of what you're planning on, and even if the dollar amount isn't that great, it's a huge rush, a lot of thinking about the possibilities. It would suck, at the very least, on an emotional level, to have that fall apart.

marcinzm2• 6 years ago

I thought the typical goal of hackers and startups

Hackers and startups are two very different groups with very different ideologies and goals and incentives. No idea why you group them together. Some startups have no technical founders even.

"change the world" and "make a difference"

Startups are businesses and like all businesses in the end they wish to make money. VCs, for example, are very clearly investors and not philanthropists. They are high risk, high reward businesses which means they need to change things to get those returns but in the end they are a business.

How does selling to Visa accomplish those things?

It gives Plaid financial stability and long term platform for its technology. If its technology makes the world a better place then its continual existence does make a difference.

psanford• 6 years ago

Visa was going to pay $5.3b dollars for Plaid. I don't really think you can say that that is "small startup ambitions."

Is YouTube a failure? Is Instagram a failure? How about Github or Linkedin? There are reasons to remain an independent company, but there are also reasons that it might be better to be acquired. Besides the premium that the acquirer will pay, large companies can actually accelerate your growth while also insulating you from a lot of the pesky overhead of being a public company.

alecbz• 6 years ago

Honestly I sort of agree with your sentiment, but I have some sympathy because many people who join early startups do it at comp deficits, and believing you're actually going to make a significant return on your investment only to suddenly realize you're not is pretty shitty-feeling no matter what.

boardwaalk• 6 years ago

I don't mean to be glib, but it's just a job. Pretending you have some sort of higher aspirations when you sign up to work at a generic fintech or, heck, a vast majority of startups? Mrpmhph.

At least rappers have the honesty to say it's about that cash.

bob33212• 6 years ago

It is probably 99% true. You can occasionally find a company that is proud that they made their users happy. Notch with Minecraft might be an example of that.

If you listen to VCs talk it is 100% about exit price.

yowlingcat• 6 years ago

I thought the typical goal of hackers and startups was to "change the world" and "make a difference".

That sounds like the goal of a non-profit, not a startup. What a founder says at a TED talk (which I admit can often sound like the former) shouldn't be conflated with the nuts and bolt conversations they have with their closest lieutenants and investors. Assuming we mean venture funded by "startup" the definition has always been growth oriented, highly risky and innovative through disruption.

It's also kind of indicative of how small startup ambitions have become. Acquisition has become a measure of success, not failure.

Really? I'm surprised you think that acquisition is either a measure of success or failure in a vacuum. Wouldn't the terms and the specific deal be important than how a company exits? After all, there's a world of difference between an acquihire and a strategic merger.

PopeDotNinja• 6 years ago

It's OK to say "I'm sorry you didn't get your payday" and "your company's exploitation of my data sucks big time" to the same person.

lmm• 6 years ago

I thought the typical goal of hackers and startups was to "change the world" and "make a difference". How does selling to Visa accomplish those things?

If your aim is that everyone should have access to these tools then getting Visa to integrate them is a pretty good way to accomplish that - Visa is big enough that if they adopt something then pretty much every credit card will have to match it.

Rapzid• 6 years ago

I'm doing it to get paid. Yeah, I also want to make a great product and all that but..

Also, I'm getting paid.

cblconfederate3• 6 years ago

Looks like tech is the new finance

throwawayacct8• 6 years ago

Can attest that some employees and ex-employees took a decent tax hit by exercising NSOs after the acquisition was announced at the $5.3 valuation price.

MaxHoppersGhost• 6 years ago

I’m sure those wannabe monopolists will be fine and something else will come along. The rich always get richer.

tempsy2• 6 years ago

Uh no.

Plaid is probably worth much more now than it was when it was acquired. The entire market has become much more frothy.

I would not be surprised if it could command a $10B+ valuation as a standalone company.

cs-szazz• 6 years ago

That doesn't mean much unless the employees have liquidity right? Presumably after the acquisition the employees would've been able to convert their options to cold hard cash.

z3t4• 6 years ago

If we ignore the lucky ones who where first employee at unicorn with very generously owner,,, do you really get any money as an employee when there is an acquisition !? How common is it outside Silicon Valley ?

xyst• 6 years ago

I hope they fail. Some users report they deceptively impersonate the users bank in order to extract as many data points from them (loans, lines of credit, ...)

borski• 6 years ago

That breakup fee is good $$$ though

andjd• 6 years ago

That Visa isn't fighting this should validate that the government's antitrust enforcement has been lax. For a merger valued in billions of dollars, hiring even the best lawyers for a long fight would have been a rounding error. The only way this happens is for Visa's lawyers to think that the government would likely win.

PragmaticPulp• 6 years ago

It is strange that they're not fighting it harder. I wonder if Plaid identified a better exit strategy?

Or if Visa is having some buyer's remorse over the $5 billion price tag and saw this as an easy out?

carlineng• 6 years ago

With public market valuations of B2B companies today, I could see Plaid being worth considerably more than the $5 billion that Visa agreed to. I think it's less likely buyer's remorse than just overwhelming evidence of anticompetitive behavior. The original DOJ complaint [1] has a lot of direct quotes from top level Visa execs. See paragraphs 9 and 10.

[1] https://www.justice.gov/opa/press-release/file/1334726/downl...

dexterous5• 6 years ago

No, they always knew the 500x valuation was BS. It's pretty much like they said, it was a defensive acquisition to prevent the data from going to any of their closest competitors. Visa had no idea what it was going to do with the data, but just wanted to keep it out of everyone else's reach.

vinhboy• 6 years ago

It is still called a "merger" if one company is buying out another company. Don't we normally call that an acquisition?

nceqs32• 6 years ago

There is no legal process of an "acquisition". When somebody says acquisition they really mean reverse triangular merger.

See https://witnesseth.typepad.com/blog/reverse-triangular-merge...

kemitchell2• 6 years ago

Not all acquisitions get structured as reverse triangular mergers. Not all acquisitions involve purchase of capital stock.

Lawyers refer to the field as "mergers and acquisitions" or "M&A" for short. A good bit of what good M&A lawyers do is navigate the various operational, strategic, tax, and other factors to find an optimal structure. Often, buyer and seller won't agree, as because stock and asset purchase carry different tax implications, and have to negotiate structure as part of a broader deal with potentially offsetting concessions.

Usage of "acquisition" and "merger" varies between lawyers, managers, and finance people. But it also varies among lawyers, and between states' laws. I'd recommend you just say "M&A". And try to stay out of the Delaware Court of Chancery.

itsnot2020• 6 years ago

Well as both a Visa card user and Plaid customer I suppose I'm happy about this!

wh-uws• 6 years ago

Finally some antitrust enforcement!

This was clearly going to be anti competitive and bad for consumers.

Plaid has a great product and will either spac / ipo or be a great acquisition target for someone else.

f4307• 6 years ago

Plaid broke the law and now someone can acquire it at a huge discount. They played themselves.

dexterous5• 6 years ago

You get an upvote just for the sheer brashness of that comment! :D

thiscatis• 6 years ago

Looking at this from an opionated Open Banking side here in the UK, this is a good thing.

runako2• 6 years ago

Would be Stripe's largest acquisition to date, but their private market valuation would make it affordable if paid for mostly with stock.

bnchrch• 6 years ago

Finicity is already a great alternative to Plaid.

I imagine bottles of champagne are popping at Mastercard HQ right now.

exinuit• 6 years ago

Which is crazy because Fincity bought Intuit's Aggregation engine (Customer Account Data - that intuit launched back @ Finovate 2012-ish) - so the block wasn't because of account aggregation and more for Plaid's comments towards making a alternative payment platform that would compete with VISA.

Either way all aggregators use screen-scraping when they can't get a direct connection, because banks are slow and protective of "their" data (which is really YOUR data) it's a constant tug of war.

ChrisArchitect• 6 years ago

Guess this is related:

Plaid blog post 'The Year Ahead' https://plaid.com/blog/the-year-ahead/ (https://news.ycombinator.com/item?id=25754256)

d33lio• 6 years ago

It blows me away our legal system can prevent this but not a tech social media plutocracy?

lovecg• 6 years ago

Baby steps.

kemitchell2• 6 years ago

Can? Sure. Motivated to do so? Not a given.

theonlybutlet• 6 years ago

Glad to see they're starting to flex that antitrust muscle a little bit, it's been atrifying over the past few decades.

anonu2• 6 years ago

* atrophying

But yes, and this is a taste of what's to come. FB, GOOG, AMZN... watch out.

sshah1983• 6 years ago

My guess is that that Plaid will go public via a SPAC deal now. I think it's highly likely GSAH (Goldman Sachs Acquisition Holdings) is that SPAC that does a deal. They have $750M to play with and given Visa was going to buy Plaid for $5.3B, the numbers kind of make sense.

phpsuks• 6 years ago

Or may be PSTH.

tallneil• 6 years ago

Yeah I think this is a strong take.

ashraymalhotra• 6 years ago

Important to note that there is no break-up fee that Visa (or Plaid) will pay.

Source: https://www.bizjournals.com/sanfrancisco/news/2021/01/12/vis...

anonu2• 6 years ago

Nice pt. This is common as merger deals typically have MACs that carve out specific events like failure to get antitrust approval...

seanieb• 6 years ago

I’ve some friends that works there, so I’m hesitant to say this, because I’m sorry for them, but Plaid is a terrible company. Their main product scrapes financial data from unsuspecting users that simply think they’re making a bank transfer and not signing away the privacy and security of their banking, 401k and trading information.

https://twitter.com/seanieb/status/1298871471645761537?s=20

xvector2• 6 years ago

I can't wait until we have smart contracts on a privacy coin that let me invest and grow my wealth anonymously.

hahaxdxd123• 6 years ago

Anonymously is unlikely - how would the government get their taxes?

smnrchrds3• 6 years ago

They are getting sued by TD Bank for this very reason:

The bank said in the court filings that the interface "dupes" consumers into believing they are entering personal information into TD Bank's trusted platform.
"In reality, however, consumers are unwittingly giving their login credentials to the defendant, who takes the information, stores it on its servers, and uses it to mine consumers' bank records for valuable data (e.g., transaction histories, loans, etc.), which the defendant monetizes by selling to third parties," TD claimed in the court records.

https://www.ctvnews.ca/business/td-bank-files-lawsuit-agains...

Also, giving your credentials to any third party, including Plaid, voids the warranty at many financial institutions. If your account gets hacked and your money stolen, you may find out that the zero liability policy no longer applies to you.

xtracto• 6 years ago

That´s interesting, and it is an important "stick". On the other side, I know some banks are giving a "carrot" to these types of companies by providing a "portal access" that allows these companies to connect their customers with their bank accounts so that the customer can select what to share with these sites.

Of course, once those portals are enabled we enter the Facebook game: Where a lot of customers will blindly give all access to Plaid like companies, and then consumer group advocates will criticize for the amount of information that they are (still) mining from ignoring customers.

cameldrv4• 6 years ago

It's difficult to draw a clear line between what Plaid is doing and a phishing scam.

morpheuskafka4• 6 years ago

Also, giving your credentials to any third party, including Plaid, voids the warranty at many financial institutions. If your account gets hacked and your money stolen, you may find out that the zero liability policy no longer applies to you.

The trouble is, giving someone your account number also makes it not the bank's problem what they do with that number, even if it was clearly unauthorized by you. There's no good way to do ACH transfers without a high degree of trust in the recipient.

throwaway99803• 6 years ago

I am sure I will be called naive, but this is shocking to me. I assumed that Plaid was integrating with the banks and not doing this sort of thing because of the people associated with Plaid. Their seed round included Spark Capital and Google Ventures. Their most recent round included Mary Meeker and Andreessen Horowitz. [1]

These investors have reputations to protect. This type of thing would certainly come out in diligence:

"How do you gain access to the customer's account data with their bank?"

"We impersonate their bank."

"Do you tell them you do this?"

"No."

"Ok, that's probably fine."

How in the hell does this conversation pass muster?

[1] https://en.wikipedia.org/wiki/Plaid_(company)#Funding

f4307• 6 years ago

Oh man I can't believe they actually pulled this on a Canadian Bank.

I tell my founders to always always fly straight or don't fly at all because if you cut corners or deceive, it will come back to you.

Had they been honest and played by the rules they could be sitting on a massive windfall.

Unfortunately, some VCs and founders think like gangsters and get surprised when things dont plan out. Just because it worked for someone in your circle doesn't mean its gonna work for you. It is a horrible behavior to emulate.

WesolyKubeczek• 6 years ago

takes the information, stores it on its servers, and uses it

So does, for example, Yodlee, when you use them to have an API for bank statements. I cannot say if they too monetize the data that opens up to them for grabs.

It took legislation and years of preparation to enforce APIs and interoperability onto European banks (yes, I can now use bank A's app to view my account balance in bank B, while maintaining control over what kind of access I'm giving). Can't see it happening in the US, though, although the demand for such APIs is clearly there, given that companies like Plaid and Yodlee prosper.

krisboyz7812• 6 years ago

No, that's not the problem at all. The problem is that Plaid falsely used TD Bank without having a relationship with the bank. The company literally has a bank partnerships team so that "void warranty" argument doesn't even make sense.

cosmie• 6 years ago

Also, giving your credentials to any third party, including Plaid, voids the warranty at many financial institutions.

Funny enough, I've seen that be the case at some banks that simultaneously integrate Plaid into their online account application flow for the initial/funding deposit but. Pretty ironic that users are implicitly coerced into voiding their liability protection at their existing bank during the course of opening an account at a new one. Who wouldn't hesitate to turn around and also invalidate your liability protections themselves if you used your new bank's credentials with Plaid elsewhere.

ehnto• 6 years ago

Good god that's disgusting behavior. Surely VISA would have seen this as a huge risk?

teagee• 6 years ago

I tried to use their API for a personal project and found starting one month a bunch of transactions were missing from my bank account. It turned out Chase included a promotion on the pdf statement that month which threw off their scraping algo. Really woke me up to their "tech", I changed passwords and avoid them now.

morpheuskafka4• 6 years ago

They really do need an OAuth rather than save-and-forward-credentials approach to account access. Hopefully the new FedInstant platform will have improvements in this area.

That said, I personally wasn't surprised to see they have this access. It makes sense that if you give them your bank password, they will have full access to your account unless they clearly convince me otherwise.

judge20202• 6 years ago

FedInstant

for the uninitiated:

https://www.frbservices.org/financial-services/fednow/index....

https://www.frbservices.org/financial-services/fednow/what-i...

briankelly2• 6 years ago

Yes, awhile back my bank account was decoupled from Venmo for reasons unknown. I unwittingly used Plaid to sign into my bank account instead of the usual wait a couple days procedure. No indication whatsoever - only found out because I saw an article, probably on here, about this company and their basically fraudulent practices.

ngai_aku• 6 years ago

I was under the impression that Venmo uses Plaid’s APIs on the backend, no?

lambda_obrien• 6 years ago

Now I know why I can never think of good ideas for a business, I'm thinking about what I can build to help my customers, but in today's SV I need to be thinking how can I more easily steal user data at a lower cost than my competitors.

mattnewton• 6 years ago

I once went to use plaid to apply for a mortgage on one of the new fancy broker platforms. It asked me to type my login credentials.. sketchy , but alright banks and mortgage companies seem to trust them? Then they asked me to disable 2FA on my account and at that point it was indistinguishable from a phishing attack to me. I noped out and changed my bank password immediately.

jsinai3• 6 years ago

This is why a standard API is needed, like Open Banking in the UK. When I use a third party app, the access request is redirected to my bank app and authorisation is granted there. At this point it is explicit what data the third party will require. Once authorised, I’m redirected back to the third party’s app. At no point have I given my credentials. This must be renewed every 90 days. Furthermore I can view what apps have access to my account and can revoke this access at any time.

PS Yes I know people like Ben Thompson [1] and even the US Treasury (mentioned in the same link) advocated for a private solution like Plaid (and nearly by extension Visa), but seriously this seems like something that needs to be government regulated to prevent incentives for selling user data.

[1] https://stratechery.com/2020/visa-plaid-networks-and-jobs/

Ericson2314• 6 years ago

Well, better one small company doing that garbage than Visa! It makes it easier to avoid.

kinkrtyavimoodh• 6 years ago

I am sorry to say this but your friends should really give a thought to why they are still working there. I understand that people have families to feed and mortgage, but they should at least consider changing jobs if they are software engineers.

krisboyz7812• 6 years ago

That's not true. Plaid says they'll be accessing your information literally when you sign into your account.

ultimoo• 6 years ago

This is so terrible. Is there an easy way for me to write to Plaid to delete all my information or do I have to go into each service and unlink?

asibehar• 6 years ago

If you're in CA, use the CCPA. They claim to have removed my information in response to a CCPA request.

EricFortney• 6 years ago

Yes.

https://my.plaid.com/help/360043065334-can-i-remove-app-acce...

gravyboat• 6 years ago

Why are you sorry for them? They are making the choice to work at Plaid when they know Plaid is a terrible legal phishing company.

nailer2• 6 years ago

FWIW their competitor Teller uses the bank's own native APIs.

The idea is the bank can't shut off Teller clients without shutting off their own customers. This involves a lot of iOS reverse engineering.

So things like Plaid's Capital One integration breaking for months have never happened with Teller - who've been running for something like 5 years now.

https://teller.io/

ZephyrBlu4• 6 years ago

So Teller reverse engineers a bank's internal APIs and uses those to manage your account?

fintechthrow456• 6 years ago

As someone who's worked in fintech for 10 years, I think this is a bad take. Out of all aggregators (what this is called), Plaid is by far the most open and privacy-forward.

First, they're transparent about being a 3rd party that's part of the flow (see https://plaid.com/blog/the-all-new-plaid-link/). It's clear it's Plaid, they use neutral colors and not the bank's, etc. They have a portal where you can manage your data (https://my.plaid.com/).

Second, they are very open about not selling data (unlike most of the their competitors). It's in their terms and their website (see https://plaid.com/how-we-handle-data/). I guess that could change, but from working with them I know it's part of their positioning so I'd be surprised if that changed.

Third, they've announced bank integrations and afaik they're moving to OAuth where the banks support it (I've seen this in the wild, but can't replicate right now). The key here is where banks support it. I think you have to look at the historical context: the banks do not want you to own your data as a consumer. They don't want fintech apps to exist. Having talked to banks about integrating directly with them, it's onerous and only the big players can do it. Plaid's fighting the good fight for fintech startups.

But yeah it's a less-than-ideal solution and it sucks that it doesn't work without creds flowing through and it's not clear regulators or banks will work to make it better. That sucks. I just think bashing on Plaid here is one-sided.

(throwaway account because I work in fintech)

ZephyrBlu4• 6 years ago

But yeah it's a less-than-ideal solution and it sucks that it doesn't work without creds flowing through

I can appreciate that Plaid is trying to push stuff forwards, but (Presumably) storing your bank credentials in plain-text is a far worse than a "less-than-ideal solution".

kelnos• 6 years ago

It's clear it's Plaid, they use neutral colors and not the bank's, etc.

Every time I've been confronted with a Plaid-backed bank login prompt, they use the bank's colors and logo, the word "Plaid" or their logo is either nowhere to be found or is in tiny fine print, and I run away screaming from that service.

path411• 6 years ago

The plaid flow is typing your bank credentials into a domain not controlled by your bank, it's pretty big fail right at the start.

jennyyang• 6 years ago

IIRC, they have basically an instance of a scraper for every different bank web site, which to me doesn't seem very scalable. I'm not sure if this is still the case, but when I interviewed a few years ago, it definitely seemed that way.

mtgx• 6 years ago

Pretty much how 99% of this data robbery happens by all surveillance companies.

This is why Facebook is so pissed off at Apple that it dares to ASK users first.

"Most users aren't aware what data is gathered about them" is about 10x more accurate than "users don't care about privacy", even though it's the latter that gets repeated all the time (with some help from the surveillance companies themselves spreading this propaganda).

Kharvok• 6 years ago

I can confirm this as I currently use Plaid in a few projects. People have no idea what they are signing up for when they authorize this. It's possible to get near real time transaction data from somoene's bank account as well as monitor their account balances for any linked account essentially in perpetuity. With this data it's possible to back in to a lot of behaviors about someone's life. All of that is handed to any firm you authorize to link your bank account.

Dirlewanger• 6 years ago

Blame the banks for dragging their feet and not making proper APIs for these companies to use instead of screen scraping.

purple_ferret2• 6 years ago

Yet Intuit was able to shut down Credit Karma's potential as a competitor with ease. Something fishy in the district of Washington.

dexterous5• 6 years ago

Well, Intuit showed a little restraint and didn't offer to pay an obscene price for Credit Karma. :)

kregasaurusrex• 6 years ago

There's a decent bit of M&A activity going on in finanacial services lately- SoFi recently announced going public, Simple being dissolved after BBVA merging with PNC, Lending Club merging with Radius Bank, and now Plaid's merger termination with Visa. Lots more demand exists for building fintech tools, since significantly more transactions that would normally take place in-person have moved towards being online due to the pandemic. It makes a lot more sense for the whole ecosystem to move towards being data-driven and API-friendly both for consumers to to have less friction between services, and for businesses to deliver a better customer experience. Having the merger fall through is probably better on all sides such that one corporation doesn't retain too much power and act as monopolistic gatekeeper driving up fee prices.

Also, wanted to say thanks to Zach for doing a Fireside Chat with Lambda School students last month! It's great to hear from your perspective about industry knowledge & experience in order to prepare for a career in tech.

desireco422• 6 years ago

I am surprised Plaid is a business. It is a bunch of scripts of dubious security. How businesses are coming on board with that is worrisome.

On the other hand, if we could have standard API and let people integrate services, totally welcome that. But let's not pretend this is anything like that.

If you know something more, please educate me.

themacguffinman2• 6 years ago

Consider it market proof of how much demand there was for API integration that this suboptimal hack was viable. "Proper" APIs will follow; For example, Fidelity built a proper system (Fidelity Access) in response to all the screen scraping. The Fed is now also standardizing some kind of API I think.

desireco422• 6 years ago

That is what I mean. They have investors, if business model is such that can disappear in few year, what is the point of investing in them.

alexfromapex• 6 years ago

Could even break those companies up further, at least Visa since financial censorship is becoming prominent with their monopoly share of the market

kevas• 6 years ago

Their link to delete data for CA residents: https://plaid.com/legal/data-protection-request-form/

nceqs32• 6 years ago

Plaid acquired a direct competitor Quovo in 2019 for $200m. I am sensing a trend.

https://www.businessinsider.com/plaid-acquires-quovo-2019-1

74639497• 6 years ago

I gave them access to my bank via coinbase. If I change my bank password would they lose access to my account? If not, what do I need to do to make Plaid lose my banking access?

doikor• 6 years ago

Wait you actually login to a bank using a password? It’s all single use codes from a booklet or two factor application here in Finland (and has been for decades now)

(And the two factor is the kind where you input a pin code every time)

Visa and Plaid Abandon Merger After Antitrust Division’s Suit to Block

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