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We estimate that Plaid made $250M in 2021, a 47% increase from 2020. Plaid’s revenue grew at a CAGR of 58% from 2017 to 2021. Plaid makes money from fintech apps in three ways: by charging a one-time fee when the apps use Plaid to connect to their customer’s bank account, a per-request fee for any transaction through Plaid such as moving money from a bank account to Venmo, and a monthly subscription fee. Most of Plaid’s revenue comes from per-request fees. Plaid has two pricing plans, a pay-as-you-go with no monthly commitment and a custom plan with volume discount, premium support, and integration assistance. 

Note: Horizontal axis is in log scale for visual clarity. Size of the bubble indicates valuation.

Plaid raised $734M from Altimeter Capital, Index Ventures, Kleiner Perkins and Spark Capital. Its last private valuation is $13.4B, at a revenue multiple of 54x. Plaid is the third highest valued fintech startup in the US after Stripe ($74B), and Chime ($25B).

Plaid acts as a middleware for fintechs like Venmo, Cash App, and Robinhood to connect to their customers’ bank accounts. With only one-third of US banks opening up APIs to pull data outside the bank, fearing competition from fintechs, Plaid screen scrapes data and gives fintechs APIs to ping that data for use cases like moving money to their wallets or fast-tracking customer onboarding. Plaid charges fintechs usage-based fee and a flat monthly fee for maintaining these connections. Screen scraping-based connections break often when banks change their templates, put up pop-ups, or introduce multi-factor authentication.

Starting as a white-label account linking service, Plaid transitioned to a consumer brand by putting its logo on the bank linking experience inside fintech apps, creating a Visa-like 3-sided network of 500M customers, 11,000 banks, and 2600 fintechs. As more customers see Plaid’s logo, they become more comfortable with sharing their login credentials with it, improving sign-ups, even though the underlying process is somewhat hacky. 

Plaid indexed on the rapid growth of consumer fintechs and added 500M bank accounts in the last 6 years, growing 90% annually, which attracted other fintechs who could easily onboard these large numbers of customers by using Plaid, rather than competing services.

While aggregators like Yodlee ($660M) pre-existed Plaid, Plaid’s Stripe-like pay-as-you-go pricing, and easy-to-use documentation, compared to Yodlee’s annual fixed fee contracts and clunky documentation got immediate traction with young fintechs like Venmo, Cash App, and Chime. Venmo was Plaid’s first large customer that used Plaid to check the balance in customers’ accounts before forwarding them cash in their Venmo wallets.

Plaid’s core product is a screen scraper that asks customers for their login credentials, uses it to log into their bank account, scrapes the data, and puts it into a data layer for fintechs to query through APIs. Its products can be categorized into 5 buckets:

Data aggregation is getting commoditized with Plaid, Yodlee, and MX ($1.9B) building proprietary connections with only top 500 - 1000 banks while outsourcing development to offshore software companies or reselling connections from other data aggregators for the long tail of 11,000+ banks. That’s why there’s a huge overlap between the banks supported by data aggregators, and even if a fintech uses two or more aggregators, they don’t get massive net new coverage.

New startups offer alternative ways to get bank data. For instance, Venice is building a Segment-like aggregator of aggregators, pulling data from Plaid, Yodlee, MX, and others that fintechs integrate through a single API, saving them from building individual connections with multiple data aggregators. Another startup, Front (raised $6M), is building APIs to pull real-time investment data from brokers, exchanges, crypto-wallets, and custodians.

Plaid faces other headwinds – Large banks like Capital One, JP Morgan, and Wells Fargo force Plaid to pull data through APIs but surface bare minimum information like 90 days transaction history without any metadata, eroding Plaid’s flexibility of pulling whatever it wants through screen scraping. Another headwind is the rise of payroll API companies like Pinwheel ($500M), Argyle (raised $77M), and Atomic (raised $68M), which Plaid’s customers like Cash App are using to pull money directly from customer’s payroll accounts rather than their bank accounts, reducing their usage of Plaid.

With growth from its core data aggregation product saturating, Plaid’s future upside comes from selling new products to its 2600 fintech customers and 500 million linked bank accounts, representing 40% of US bank account holders. Plaid launched new products in two key categories - income and payroll verification, and ACH payments.

Income and payroll verification

Plaid is making a push into connecting fintechs with their customers’ payroll accounts by plugging into payroll providers like ADP and Paylocity. By bundling employment history and income details from payroll providers with the banking history of the 500M linked accounts, Plaid can get an edge over the other income verification API startups. Fintechs get the income and spend data from Plaid, making it more useful for underwriting loans, credit cards, or BNPL products.

ACH payments

Plaid’s big bet is to become a Visa-like mediator of a modern Account to Account (A2A) payment network by making ACH payments faster and safer through new products like Signal (fraud risk assessment) and Guarantee (100% promised funds), allowing fintechs to give merchants immediate cash instead of the typical 3-5 day wait for ACH transactions. Plaid aims to attract merchants from its fintech clients like Block (2M+ merchants) to its ACH network with lower processing fees than cards and make money by charging transaction fees.

Alternative ACH-based payment networks

FedNow from the Fed and The Clearing House’s Real-time Payments (RTP) aim to provide fast ACH-based account to account payment just like Plaid. RTP is already live with large banks like US Bank and Chase, and FedNow is expected to launch in 2023, covering all US banks and can become the dominant network for fast ACH payments rather than Plaid.

Bank and customer relationships

If Plaid’s ACH-based network takes-off, it’ll eat into the debit/credit card volumes, which’ll impact anyone who makes money through the interchange fee. This includes banks like Chase and Capital One from which Plaid sources data and fintechs like Chime, putting strain on these relationships.