Plaid is teaming up with Railsbank, a banking-as-a-service platform, to make it easier for companies to “take advantage of the massive embedded finance opportunity.”
Railsbank customers in the UK will have access to Plaid’s Payment Initiation API through this partnership, allowing clients to accept instant bank payments within their app or website, according to a news release.
The clients can also have access to this product without having to onboard two different service providers, according to the news release. This offering claims to enable clients to have higher conversion and reduce friction which helps with customer loyalty.
Plaid’s Keith Grose, Head of UK, said open banking payments has become a strategic focus for the data aggregator. He explained open banking payments are like Venmo via an API or like a push payment, but with Plaid’s product it is built into the banking rails.
“These are fantastic tools for others to build fintechs on top of,” he said. “Now you can handle payments, account opening, and all sorts of things together in a single offering by working through the Railsbank and Plaid partnership.”
This partnership is good for the future of open banking payments and Plaid’s ability to make sure that people understand what open banking payments are at scale, Grose said.
“Over time, more users in the UK and Europe are going to be exposed to open banking payments and realize it’s actually a better user experience than card payments for many use cases. Things settle instantly,” he said.
A recent report by Lightyear Capital estimates that embedded finance will grow from $19.21 billion in 2020 to $196.9 billion in revenue in 2025.
Grose said the more partnerships Plaid can attain like it has with Railsbank and the more users using open banking payments helps Plaid achieve its “mission longer term of helping unlock financial freedom”
“There’s no reason in the modern day where you’re making payments from your phone, and everyone has a smartphone, that we should be paying based on plastic cards that were created for a different offline world,” he said. “Open banking payments are designed to be digital first. Working with players like Railsbank and others in the future will help us start to make the case to users of why this is going to be the case.”
Recently, FinLedger interviewed Plaid’s Head of Financial Access Ginger Baker about her perspectives on Plaid’s financial access strategy. At prior companies, Baker worked as head of on-demand liquidity at blockchain firm Ripple, and was head of financial services at Facebook. Baker also was director of payments at Square, and has worked in rewards, emerging market solutions and mobile payments at Visa.