We live in a world where everyone is conscious of how their data is being used, such as personal data, and even financial data.
Financial data when breached can cause a greater level of catastrophe to the user because it can lead to loss of funds.
Most people who often use Venmo might have come across Plaid, yea a third-party application. That does require them of their bank details.
Well, is Plaid even secured?, and why do I need to enter my bank details on Plaid ?, could it not be that I am risking my bank account to hackers working in the name of Plaid.
Well, while you have certainly come across Plaid requesting your bank details, and you are wondering if you are doing the right thing, then Don’t Panic.
In this tutorial, I will explain what Plaid is, and will, give you a detailed understanding of how safe it is.
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What Is Plaid?
Plaid is a financial technology system that works closely as a middle man between users and a particular payment platform.
The main job of Plaid is to collect users’ banking details, encrypt them and provide the necessary information to the apps needing them.
Fintech apps like Venmo will Never ask you for your bank details but rather relies heavily on the information provided by Plaid to them.
With Plaid, you can link your bank details to more than 3000 Fintech apps available, without any data compromise or security threat.
This is done through the help of an API (Application Programming Interface) most developers developing Fintech apps, adopt the use of the Plaid API, in getting the necessary banking information regarding a particular customer or merchant.
Is Plaid Secure?
Plaid uses all levels of security to ensure that your data is safe, when you link your account on Plaid, it instantly encrypts your sensitive data and shares it with the application needing it.
In order to ensure that the information provided is secure, Plaid uses a strong and uncompromising security system, which can pave some level of difficulties for malicious software which might try to steal sensitive data from them.
The following are how data are Secured on Plaid :
- Multi-Factor Authentication: This will be able to keep your account from logins not authenticated by you. Using a two-factor login system, aside from your normal password, you will also have a passcode that will be required from you whenever you are login in on any device.
- Data Encryption: Sensitive data regarding your account are totally encrypted and shared on a secured network.
Plaid uses what is known as Advanced Encryption Standard (ALS) which Is used on any stored data and Transport Layer Security (TLS) which is used to protect all data transferred across several mediums.
- Cloud infrastructure: Plaid uses cloud infrastructure to ensure a higher level of security within the Plaid system.
Other security strategies implemented by Plaid to ensure keeping user’s data safe is Robust Monitoring as well as Third-party reviews.
Why Does Plaid Ask to Connect to Your Bank?
As I Said Earlier, Plaid Works as An Intermediary Between You and Other Financial Apps, Whenever Plaid Asks to Connect to Your Bank, It Is Simply Trying to Get Certain Data from You that Will Be Shared to The Fintech App Needing It.
Some of this data could be your balance or numbers of Deposits or withdrawals, Plaid is doing this in order to prevent you from explicitly disclosing your bank details to financial technology apps.
Apps that Use Plaid System?
There are several that make use of Plaid, to connect users to their bank, aside from Venmo, we have the following:
- Robinhood
- Betterment
- Dave
- Coinbase
- Pillar and so on.
Does Venmo use Plaid?
Yes, The Venmo app is based on Plaid, whenever you want to link your bank on Venmo you will be redirected to the Plaid app, where you will provide the basic details associated with your bank.
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Video Guide
Conclusion
Nowadays, most Fintech apps rely on Plaid, because of its higher level of security and reliability. Understanding Plaid will give you more reasons why you should consider every Fintech app in using the Plaid system.
Because you no longer need to add your bank details on apps you can’t guarantee its security. With Plaid, only an encrypted portion of sensitive data is sent out.
And therefore, in the case of security breaches you are on the safe side.