Better payments, better business

John Anderson
Head of Payments, Plaid

John leads Plaid’s product teams and our efforts to make bank payments smarter, faster, and safer across the digital finance ecosystem.

I think you would agree that the world of payments has been in need of a refresh for a very long time. At Plaid, we see incredible promise in transforming payments in ways that improve the conversion of new users to your apps, reduce the previously accepted costs of credit & debit card transactions, and fight against user fraud in new and effective ways. So for the past 12 months we have put some intense focus on enabling bank payments for many use cases such as pay-by-bank, bill pay and account funding. Today I want to focus in on the account funding progress we’ve made in the recent months. There have been three big problems that make bank payments for account funding critical. 

First, every user who drops off on an account funding flow is a lost customer. That’s why Plaid is maniacal about user experience and conversion rates. 

Second, certainty of funds is increasingly critical. Controlling certainty in part comes to managing fraud and risk in a world where fraudsters are increasingly creating more risk surrounding bank payments. 

Finally, you need to implement a multi-rail payment strategy to improve user experience, but implementing multiple rails is fraught with technical complexity. 

Let me take a moment to update you on how the products we've been building have focused on solving these problems, so you can get high converting onboarding, better certainty in managing fraud and risk, and seamless handling of multi-rails.

Fix Your Onboarding and They Will Come 

As mentioned, every user who drops off on an account funding flow is a lost customer. In fact, this issue was front and center when we conducted a Fintech Effect survey recently. In the study, 76% of users said they would be more likely to activate a fintech app if they can sign up and access banking funds immediately.  

To increase the speed of user onboarding, we have made incredible improvements to streamline the user experience for instant access to your app. We do this through a product we call Auth. Here are a few highlights: 

• Users can now connect their accounts in as little as 7 seconds using a web link sent via text. Small features like these make it that much easier for your users to quickly complete onboarding. 

• Plaid now offers Instant Micro-deposits in order to support and authorize accounts on RTP or FedNow in a matter of seconds. 

I’m very proud of the results. We are on track to support over 2 billion bank payments in 2023 and that number is continuing to skyrocket. 

Monitor Your Money Movement 

Fraudsters and their attacks on payment rails and users are becoming more sophisticated each day. To stay ahead of them we have created new ways to reduce risk and monitor fraud throughout the user journey from onboarding through settlement.

Here are some of the exciting advancements:

• We introduced Beacon, an anti-fraud network built to ensure you’re doing business with trusted users and help combat fraud at scale. Beacon enables real-time fraud data sharing across the digital finance ecosystem to flag identities associated with fraud on other platforms. With Beacon, you can more effectively combat repeat first party, stolen ID, and synthetic ID fraud – and even enable ongoing monitoring to detect account takeovers. 

• We launched Identity Match, to reduce fraud by ensuring users actually own the accounts they link. This feature uses identity information provided by a user against identity information associated with the bank account. One of our customers saw that accounts with a mismatched phone number were 15x more likely to have an unauthorized return. They were able to use that information to block future users with mismatched phone numbers.

• Our new Signal dashboard can help customers more easily understand their ACH return risk scores, and more easily manage their risk thresholds. For transactions that Signal categorizes as low-risk, companies can create a better user experience by providing instant access to funds with the confidence the transaction will clear.  The results so far make me very proud of our team. Plaid expects to protect $30 billion dollars in transactions over the next 12 months with Signal.

More Rails, More Problems

The last problem my team is addressing relates to multi-rail payments. No doubt, the arrival of new rails is opening up tremendous value for business and for users. But implementing multiple rails can be fraught with technical complexity.

When FedNow launched in July it created a new option for instant payments. The challenge is that deciding when to use FedNow vs. RTP vs. same day ACH can be difficult. Quick example: RTP and FedNow are in fact instant, but they don’t have 100% coverage like ACH. If that isn’t complicated enough, some banks only support RTP OR FedNow. Faster pushes mean greater account related risk. Oh, and on top of this there’s the challenge of managing faster treasury sweeps.

So imagine routing tens of thousands of payments. Some instant. Some not. That's hard.  Plaid Transfer was built with multi-rail complexity in mind. It enables access to these payment rails with a single API and uses a complex algorithm to make sure payments get to the right bank at the right time on the right rail.

Connie Theien, SVP, Payments Industry Relations at the Federal Reserve System, recently spoke about Plaid’s growing leadership in this space. “We are excited to see providers like Plaid embracing instant payments and enabling financial institutions to realize the benefits the FedNow Service can deliver. ” 

Showing Users the Road Less Traveled

As I mentioned at the beginning, Plaid sees incredible promise in transforming bank payments in ways that improve the conversion of new users to your apps, fight against user fraud and return risk in new and effective ways, and manage multiple rails. We would love to engage with you around these innovations; to learn more please visit our payments page at plaid.com or click here to chat with our Sales team.