Stripe adds tech for Plaid-like account aggregation

As Stripe's small-business customer base passes 3 million, the fintech is attempting to cement ties between those businesses and customers for payments and other financial services.  

Through a product launched on Wednesday called Financial Connections, businesses can directly connect to customer bank accounts to verify transactions, perform risk management and support a variety of financial services. 

Financial Connections allows Stripe, whose valuation of more than $92 billion makes it one of the world's largest private technology firms, to expand its role as an alternative to card rails and other fintechs ahead of a potential IPO.  It also allows Stripe to be an alternative to Plaid and Yodlee, which offer permission-based access to financial account information for third parties. 

Bloomberg

Plaid, for example, in 2021 expanded its technology to allow account-to-account payments, a capability that Stripe is seeking to enhance through Financial Connections.

Stripe argues that without this type of technology, direct bank account connections are difficult to establish, requiring businesses to build custom integrations with thousands of banks, or to require new customers to provide routing and account numbers that are then confirmed in a micro deposit a few days later. 

Micro deposits — small deposits made to a user's account to demonstrate that they have access to it — are time consuming because they require the end user to wait for the deposits to show up and then report the amounts at their convenience. Plaid is working with Marqeta on a product designed to eliminate the need for micro deposits.

Stripe says Financial Connections allows users to enter their online banking credentials and select the account they would like to link, with use cases including businesses, creators of nonfungible tokens, churches and other small merchants. 

Stripe also hopes to use the bank account connections to streamline direct debit payments and allow its business clients to use linked bank accounts to underwrite risk and offer loans.

Businesses can also offer budget tracking, bill payment and examine spending patterns. 

"This is good for the churches we support, which can easily accept donations, and good for their members, who can quickly link their bank accounts," Jeremy Ricketts, product manager at Planning Center, a software platform for churches, said in Stripe's press release.