Stripe and Plaid gear up for battle – TechCrunch

Recent Product News from Stripe and Plaid indicate that the two private companies are battling against each other as the B2B fintech market matures, grows, and individual players increasingly overlap.

It might seem silly that Stripe, best known for its payment technology, and Plaid, best known for its API that connects consumer bank accounts to third-party services, are competing. This is not the case.

The quote, “All software tastes like chicken financially” is both funny and true. This is also largely true for fintech companies, but for a space-specific reason: fintech startups, unicorns, and even public companies tend to expand their capabilities over time, adding more and more skills.

B2B and B2C startups have similar motivations. Customer acquisition (advertising, onboarding, etc.) is expensive and competitive, so once a fintech has found a user or customer, it is best to extract as much value as possible from it. That’s why companies like Plaid and Stripe build and buy to meet more and more of their customers’ needs – until they find themselves on each other’s doorstep.

What happens once they do? We will find out.

The recent skirmishes of the Great Fintech War

In January 2022, Plaid announced it was buying Cognito, a move TechCrunch wrote about was part of a move “beyond just connecting accounts.” Essentially, Cognito added know-your-customer (KYC) and anti-fraud tools to Plaid’s feature list. By doing so, it could offer its customers much more than just account logins.

In 2021, Plaid had purchased a company called Flannel which focused on payments. With account logins, security tools and payment technology, Plaid was building and buying its way into a larger potential total addressable market – a market that is already under attack from other private fintechs.

It’s obvious that Stripe has expanded its feature set away from its original mission. The company has so many departments that its on-site menus become more of a catalog than an organizing tool. Seeing the company launch something new here and there is nothing out of the ordinary.

But in early May, when Stripe announced “Financial Connections,” a service that TechCrunch says will allow its “customers to connect directly to their customers’ bank accounts to access financial data to expedite or execute certain types of transactions”, we took Note.

The product announcement put Stripe on a collision course with Plaid’s core business, even if it was fair play – the latter company had already told the market payments were on its mind via the Flannel deal 2021.

Yet Plaid clearly objected to what its executives were implying as an underhanded means of acquiring information and a lack of transparency from Stripe in light of their partnership and history.

As the two companies argued on Twitter, it was clear that the gloves, as much as they could be in the world of APIs, were off.

Comments are closed.