Connecting Your Bank Account To an App is Now a $3-Billion Business

When you link your checking account to Venmo or use it to buy bitcoin, a startup called Plaid is likely facilitating the connection with your bank. You punch in your user name and password; Plaid checks those credentials with the financial institution and, if they’re accurate, passes banking information back to the app. That’s it.

From a report: This kind of software has been around for decades. But in the last year, Plaid has captured investors’ attention. The San Francisco startup was the subject of a bidding war among venture capitalists and at least one tech company, ultimately resulting in a $250-million investment last month. That money will partly go toward the acquisition of one of its biggest competitors. Plaid announced Tuesday it was buying New York-based Quovo Inc. The deal could be worth about $200 million after performance bonuses, said three people familiar with the transaction, who asked not to be identified because terms of the deal were private.

Since starting Plaid in 2012, Zach Perret has sold the startup’s nine lines of code to some of the most popular finance apps. Robo-advisor startup Betterment, cryptocurrency exchange Coinbase Inc., PayPal Holdings Inc.’s Venmo and stock-trading app Robinhood Markets Inc. have all used Plaid. Meanwhile, Quovo specializes in wealth management and brokerages. “This represents the merging of two complementary but both very important businesses,” said Perret, Plaid’s chief executive. Plaid is now valued at roughly $3 billion.

Read more of this story at Slashdot.