Plaid’s AI-enhanced transaction categories: Smarter categorization, sharper insights

Financial experiences are rapidly shifting toward personalized, predictive interactions powered by AI. Delivering those experiences requires highly accurate transaction data, not just raw descriptors. With visibility into billions of transactions, Plaid has long led the industry in making financial data useful and actionable. Today, we’re taking the next step with AI-enhanced transaction categorization, setting a new standard for accuracy and insight to power the next generation of financial experiences.

More accurate categorization, trained with AI

Our upgraded transaction categorization model brings measurable improvements, delivering up to 10% higher accuracy on primary categories and 20% higher accuracy on detailed sub-categories. With these enhancements, there are fewer missed transactions and cleaner, more accurate data labeling.

Using AI-assisted label generation and targeted human review, the model interprets descriptions with greater context and identifies patterns across millions of transactions daily. The result is cleaner, more reliable categories that unlock deeper financial insights.  

More granular categorization for a more detailed financial picture

Our expanded categorization taxonomy introduces more than a dozen new subcategories that help our customers better understand income types, repayments and disbursements, bank fees, and transfers.

With these refinements, our customers can now get a more detailed picture of their users’ cash flows to design products that fit their specific financial needs.

Enabling financial use cases

To see the impact of smarter categorization in action, meet Layla. She drives for DoorDash and Lyft, earning income from both platforms throughout the week. In the previous version of the model, both deposits might have been labeled “Other Income,” giving limited visibility into the nature of her earnings. With Plaid’s enhanced Transactions Categories, those deposits are now recognized as “Gig Income”, adding crucial context that helps digital finance providers better understand patterns around how, when, and where users earn.

For earned wage access providers, this helps forecast payouts, adjust limits responsibly, and surface savings opportunities. For personal financial management apps, it enables automatic tracking, more accurate tax estimates, and personalized insights that build user trust.  

Lastly, Plaid customers benefit from knowing that their transaction categorization is future-proofed with artificial intelligence that learns as the financial ecosystem evolves.

Defining the future of financial intelligence

As AI reshapes financial services, high-quality data becomes essential. We’re continually improving Transactions to deliver more intelligent enrichment and predictive capabilities. And with built-in API versioning, customers can adopt new models without disrupting existing workflows.

Existing Plaid Transactions customers can get the latest categorization by specifying v2 within the personal_finance_category_version field when calling Transactions via /get or /sync. To continue using the current version, specify v1. Please reach out to your account manager for any questions or more information.

Learn more about how Plaid’s AI-enhanced transactions can help you deliver more personalized experiences.