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Reaching yourfinancial goals may seem overwhelming if you aren’t properly organized. Fortunately, there are tons of apps available to help you with banking, investing, budgeting, borrowing and more. However, entering your financial information into each one of these apps gets tedious over time.
Plaid has created a solution for both consumers and financial apps to make the account setup process quicker and easier. But is Plaid safe? How does it work, and how does it keep your data safe? Keep reading to get answers to these questions and more.
What Is Plaid?
Plaid is a platform that shares your banking information with other apps you use. Plaid is connected to over 7,000 financial apps, such as Acorns, Truebill, Wave, Venmo, SoFi and many others. Plaid can connect to over 11,000 financial institutions throughout the United States, Canada and Europe.
Traditionally, each app that you use must have the infrastructure to support connections to many different banks and financial institutions. However, it’s easier for them to rely on a third-party, such as Plaid, that creates these connections for them. In addition, it can make it easier for you to have your financial information stored in one location to share amongst your apps.
Is Plaid Safe To Use?
Plaid is safe to use due to its transparent privacy policies and strong security features. Plaid makes it easy to control your financial information and data, and it does its best to communicate to you which apps have access to your information. Your Plaid Portal lists the apps that are connected to your Plaid account and allows you to delete connections and Plaid data.
A Better Way to Bank
Good To Know
Plaid uses the following security features to helpprotect your financial information:
- Encryption
- Multi-factor authentication
- Cloud storage
- 24/7 monitoring
- Independent security testing
Plaid also has ISO 27001 and ISO 27701 certifications, which means that it meets expanded security guidelines set by the International Organization for Standardization.
In some cases, you may be prompted to create a Plaid account while signing up for another app. In this case, Plaid requires that all apps that use its services display the Plaid logo and disclose why Plaid is involved in setting up your accounts. Whenever you connect your Plaid account to another app, it lists what information the app needs and how it uses the information.
How Does Plaid Work?
Plaid works by sending financial account information to other apps as needed. First, you must choose the app that you want to use, and you must confirm that Plaid is able to connect to the app.
When you are initiating a connection between your Plaid account and another app, you will need to enter the username and password for the financial information that you want to send. For example, if you are trying to send information for yourchecking account, you will need to enter the username and password for that bank. Plaid does not share the username and password for your financial accounts. Instead, it simply sends the necessary information, such as account numbers.
Plaid is completely free for consumers. The app that you are connecting to will pay Plaid a fee for setting up the connection.
Final Take
Plaid is an easy way for consumers to store their financial account information and share it with other apps that can help them reach their financial goals. In addition, safety is one of Plaid’s top priorities, so you can manage which apps have access to your information and be sure that Plaid isn’t sharing your information with just anyone.
A Better Way to Bank
However, you could always opt to work directly with the financial apps that you want to use. Just be aware that some apps may not have built a connection with your financial institution, and you will have to spend some extra time setting up connections that are available.
FAQ
Here are the answers to some of the most frequently asked questions about Plaid.
- Is it safe to give Plaid your bank login?
- Plaid uses many security features to protect your banking information. You will need to enter your username and password when creating a connection with another app, but Plaid does not share this information with the app. Instead, it will only share the information required by the app.
- Should you give your credentials to Plaid?
- Signing up for Plaid is completely optional, so you don't have to give Plaid your credentials unless you want to take advantage of its services. However, some other apps may require a Plaid account to connect to your financial institution. In any case, Plaid works hard to keep your information safe.
Editorial Note: This content is not provided by any entity covered in this article. Any opinions, analyses, reviews, ratings or recommendations expressed in this article are those of the author alone and have not been reviewed, approved or otherwise endorsed by any entity named in this article.
As a financial technology enthusiast and expert, I bring a wealth of knowledge and experience in the field of digital finance, banking technologies, and data security. My expertise extends to understanding the intricate workings of financial apps, their integration with various platforms, and the critical aspects of safeguarding sensitive financial information.
Now, let's delve into the concepts mentioned in the article and provide comprehensive information:
Plaid: A Seamless Financial Data Platform
1. Introduction to Plaid:
Plaid serves as a comprehensive platform facilitating the sharing of banking information across various financial apps. With a vast network of over 7,000 apps and connections to 11,000 financial institutions in the U.S., Canada, and Europe, Plaid streamlines the account setup process for consumers and financial apps.
2. Functionality:
Traditionally, apps would individually build connections to numerous banks. However, Plaid simplifies this by acting as a third-party intermediary, creating standardized connections for multiple apps. This consolidated approach enables users to store financial information in a single location, accessible to all connected apps.
3. Safety of Plaid:
Plaid places a strong emphasis on user data security. It employs transparent privacy policies and robust security features, including encryption, multi-factor authentication, cloud storage, 24/7 monitoring, and independent security testing. Additionally, Plaid holds ISO 27001 and ISO 27701 certifications, attesting to its compliance with international security standards.
- Transparency and Control: Plaid provides users with a Plaid Portal to manage their connected apps and delete connections and Plaid data. Users have control over which apps access their information, enhancing transparency and privacy.
4. Plaid Account Setup:
Plaid may prompt users to create an account when signing up for another app. Apps using Plaid's services must display the Plaid logo and disclose Plaid's role in the account setup process. Users are informed about the information an app requires and how it will be used before connecting their Plaid account.
5. How Plaid Works:
Plaid facilitates the transfer of financial account information to other apps. When initiating a connection, users enter their financial account username and password. Importantly, Plaid doesn't share these credentials with the connected app. Instead, it securely transmits necessary information, such as account numbers.
6. Cost and Business Model:
Plaid is free for consumers. The financial apps utilizing Plaid's services pay a fee for the seamless connection setup. This business model ensures users can benefit from the convenience without incurring direct costs.
7. FAQ Section:
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Safety Concerns: Users might wonder about the safety of providing Plaid with their bank login. Plaid employs multiple security features to safeguard banking information. While users need to input credentials when connecting to an app, Plaid ensures that only necessary information is shared, enhancing security.
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Optional Account Setup: Signing up for Plaid is optional. Users can choose not to provide credentials unless required by specific apps. Plaid's commitment to data security remains intact, regardless of user account status.
In conclusion, Plaid emerges as a secure and convenient solution for users aiming to streamline their financial information across various apps, with robust security measures in place to protect sensitive data.
