The news: Stripe launched Financial Connections, an open banking product that lets businesses set up direct connections with customers’ bank accounts to complete a range of financial processes, per a press release.
Here’s how it works: Stripe says Financial Connections will let firms verify accounts for payments and payouts, check balances to minimize payment failures, and confirm bank account ownership to cut fraud.
Plaid feels betrayed: Financial Connections puts Stripe into direct competition with former partner Plaid. Plaid CEO Zachery Perret took a jab at Stripe on Twitter, questioning the firm’s “methods” and accusing it of using his company’s data to develop the new product.
What this means: Launching Financial Connections gives Stripe another string to its bow of products. As its product suite expands, it’s becoming less dependent on partners and competing with more businesses, as evidenced by its tussle with Plaid.
With the growth of account-to-account (A2A) payments, this is a well-timed move for Stripe. A2A payments have lower fees than card payments, which can improve Stripe’s profit margins. The industry megaplayer will likely embed other financial services as it builds a one-stop shop for customers looking for a seamless service for all their payment needs.
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