Connecting Your Bank Account To an App is Now a $3-Billion Business (latimes.com)

When you link your checking account to Venmo or use it to buy bitcoin, a startup called Plaid is likely facilitating the connection with your bank. You punch in your user name and password; Plaid checks those credentials with the financial institution and, if they're accurate, passes banking information back to the app. That's it. From a report: This kind of software has been around for decades. But in the last year, Plaid has captured investors' attention. The San Francisco startup was the subject of a bidding war among venture capitalists and at least one tech company, ultimately resulting in a $250-million investment last month. That money will partly go toward the acquisition of one of its biggest competitors. Plaid announced Tuesday it was buying New York-based Quovo Inc. The deal could be worth about $200 million after performance bonuses, said three people familiar with the transaction, who asked not to be identified because terms of the deal were private.

Since starting Plaid in 2012, Zach Perret has sold the startup's nine lines of code to some of the most popular finance apps. Robo-advisor startup Betterment, cryptocurrency exchange Coinbase Inc., PayPal Holdings Inc.'s Venmo and stock-trading app Robinhood Markets Inc. have all used Plaid. Meanwhile, Quovo specializes in wealth management and brokerages. "This represents the merging of two complementary but both very important businesses," said Perret, Plaid's chief executive. Plaid is now valued at roughly $3 billion.

Comments

Re: Only 9 lines of code?

[Anonymous Coward]

Itâ(TM)s perl

Re:You deserve better !

[jrumney]

Australia has a similar service called POLi (formerly Centricom). All major banks warn against using it, as it is basically operating as a phishing site to get your internet banking credentials and log onto your internet banking on your behalf to make payments on your behalf and give the retailer instant verification that the payment has been made.

These days any transfer made is instant anyway, so the retailer can get the verification from their own bank without this security nightmare. Banks are now officially setting up their own consumer payment system where you can register a phone number to accept payments to your account, which will result in an SMS to your phone informing you of successful transactions. So the lifespan of these third party security risk solutions is hopefully coming to an end. With the banks' apps integrated into Android and iOS payment APIs, the app side of making payments should be taken care of too.

You do what?!

[zdzichu]

You give your credentials to some third party and it tries them? Like, you break your contract with the bank and forgo all your rights to complain on fraudalent charges? Check the ToS of you bank – all of them make sharing your credentials a "game over" situation for account owner.
Almost every single bank provide and API for external parties to initiate payments (in this situation authorisation is processed by Bank). Pay-by-link is standard in all banks, and OpenAPI (PSD2) will force rest of them to comply.
But if you share you credentials, you are lost.