John Anderson announced as Plaid’s head of payments

I joined Plaid because we are building a sustainable company, products and a mission that my grandchildren will be proud of. My first few months here have confirmed this view, and we wanted to share a little more about what we’re working on to accelerate the future of bank payments.

Together with a network of more than 50 leading payment partners, Plaid makes account-to-account money movements smarter, faster and safer by innovating on both existing and new bank payment rails. Our APIs facilitate nearly one billion ACH-based transfers each year across thousands of apps, making it easier for people to fund new accounts and digital wallets, make investments, and send and receive payments.

Bank payments in the future start now
On first principles alone, the future of bank payments is clear: richer connectivity will allow payments to be safer, faster and more efficient. I have seen this transformation firsthand during my career in countries like India, where UPI’s accessibility opened up new economic opportunities for the people. Similar transformations are currently taking place in Brazil (Pix) and in Europe (PIS). We also see a similar trend happening in the US.

Bank payments in the US have grown steadily, but are still relatively nascent in the digital economy. According to Nacha, the volume on the ACH network has increased for seven consecutive years and in 2021 reached 29 billion payments worth $72 trillion. Same-day ACH grew by nearly 75% in 2021, illustrating how consumers and businesses now expect faster bank payments. However, we are about to enter a new phase where bank payments will become a seamless part of multiple payment experiences, whether you are funding a newly opened account, paying bills or buying goods and services online.

Consumer demand for digital bank payments is increasing
The combination of increasing debit card payments, the use of digital wallets and the growth of ACH payments shows a growing consumer preference to pay with funds from their bank accounts instead of credit-based payment methods. According to Plaid’s own user surveys of debit and credit card users, consumers have used, or are interested in using bank payments in several key areas: 85% said recurring payments (rent, bills, loan payments), 51% said large transactions (cars). , furniture, bikes), and 68% said digital wallet financing (Venmo, PayPal, Starbucks). As fintech becomes the primary way people manage their finances using multiple apps, the need for digitally native banking payment experiences continues to grow.

The next phase will be driven by innovation in several areas:

Better user experiences make bank payments fast and convenient
Plaid continually improves our best-in-class Link experience. In 2022, we meaningfully increased link conversion, translating to millions more users connecting to the thousands of apps and services that rely on our open banking platform. As the consumer experience improves, the use of bank payments for new use cases increases, creating an ever-evolving consumer demand curve. Bank payments are already becoming more seamlessly integrated into payment and money movement workflows, whether it’s recurring payments, receiving loan payments or even buying a car online like with Carvana.

At Plaid, we are making major investments to support this consumer trend. The next wave includes working with our financial institution partners to increase the use of biometrics, consumer privacy controls, and expanding API connectivity across the industry.

Smarter networks make digital bank payments safer
Another crucial trend is technologies that make bank payments faster and more secure by reducing risk and fraud. While ACH usage has increased, the scope of use cases has been limited by slow settlement times, creating the risk of chargebacks and potential fraud. Through products like Signal, we are working to expand the use of ACH in a secure way for applications that require faster access to funds.

Launched today, Signal is a machine learning risk engine that helps businesses unlock faster and more secure payment experiences by enhancing their payment risk models to better assess the return and fraud risk of ACH transactions. Similar to how card networks and financial institutions use network insights to reduce risk and fraud, Signal brings unique insights from the consumer-enabled Plaid network to protect consumers and companies across the digital financial ecosystem.

Signal now protects nearly $1.5 billion in transactions each month among early customers, who have seen
significant reductions in return-related losses and improved the precision of their payment risk models. For example, Signal helped a popular investment platform provide up to 96% of its new users with accelerated access to funds (versus 0% previously), with almost no increase in ACH return rates. This means their new users were able to start investing almost immediately, rather than waiting up to five days for the money to be paid, improving conversion rates and user engagement.

Real-time rails will make bank payments more attractive to merchants and customers
RTP and FedNow will contribute to further adoption of bank payments, not only due to the speed and security of settlement, but also through further innovation across the financial and payments ecosystem. Plaid is actively collaborating and building to unlock the next phase of bank payments with a focus on a great consumer experience, adapting Signal for new risk and fraud vectors, and other activities that will accelerate the adoption of real-time payments in the US through our payment partners and customers.

Come develop and build with us for this journey
Plaid invests in all these areas to draw the future in faster. This is the next step in our mission to unlock financial freedom for all. Get in touch if you have ideas and would like to join us on this journey.