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Justice Department Sues to Block Visa's Proposed Acquisition of Plaid

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Re: Justice Department Sues to Block Visa's Proposed Acquisition of Plaid

#51

Post by lolinder »

zelly wrote: post #49

Plaid is more of a monopoly than Visa is. Plaid is literally the only way to do ACH without microdeposit verification. There is no reason Plaid should have a monopoly on this. If banks opened up APIs for bank account verification, then anyone could compete with Plaid. As usual the Justice Department doesn't know what they're talking about.

Saying Plaid were more of a monopoly than Visa is (and Visa is a pretty bad monopoly), isn't that an even bigger reason for the justice department to move to prevent this acquisition?

Re: Justice Department Sues to Block Visa's Proposed Acquisition of Plaid

#52

Post by sib »

travisoneill1 wrote: post #34
nobody9999 wrote: post #20

I was struck by this bit: 'If Plaid remained free to develop its competing payment platform, then “Visa may be forced to accept lower margins or not have a competitive offering."' My understanding is that Plaid would/could charge significantly less (up to 50% less) than Visa currently does. And that's the value of competition . Not necessarily as a race to the bottom (as we've seen in the airline industry, but that's…

Isn't a race to the bottom the best possible thing that could happen to transaction fees?

In a competitive industry with high fixed costs and low _marginal_ costs, a race to the bottom often leads to pricing less than _average_ costs and a reduction in service quality (or inability for providers to replace infrastructure consumed in providing service.

Re: Justice Department Sues to Block Visa's Proposed Acquisition of Plaid

#53

Post by kevin_thibedeau »

vageli wrote: post #46
haltingproblem wrote: post #23

Earlier quoted context omitted.

Paypal has my banking details and can use those or credit/debit card to complete my payments. They always prefer to use bank because of no fees with cc/debit as backup. Google could do the same. ACH is really creaky and old. We need something like UPI (india) or Wechat (china) in the US. Zelle is a poor substitute.

> Paypal has my banking details and can use those or credit/debit card to complete my payments. They always prefer to use bank because of no fees with cc/debit as backup. Google could do the same. ACH is really creaky and old. > We need something like UPI (india) or Wechat (china) in the US. Zelle is a poor substitute. Why is zelle a poor substitute? I can pay people via phone number.

Zelle still uses ACH under the covers.

Re: Justice Department Sues to Block Visa's Proposed Acquisition of Plaid

#54

Post by salawat »

cactus2093 wrote: post #10
haltingproblem wrote: post #2

"Plaid has become the leading financial data aggregation company in the United States. Plaid is planning to leverage its connections to build a bank-linked payments network that would compete with Visa. Plaid’s money movement platform would allow consumers to pay merchants directly from their bank accounts using bank credentials rather than a debit card. Plaid’s established connections and technology uniquely positio…

It is quite a fascinating scenario. Apple and Google wallet are integrated into the credit card processing infrastructure. So they don't compete with Visa, their payments still go over Visa's rails. Plaid's killer feature has always been their private access to APIs that the banks won't give to anyone else. It's essentially like they're using modern web APIs while everyone else is using snail mail (i.e. ACH, bank tra…

Technically, Plaid doesn't have access in a sanctioned way. You pretty much guaranteed violate any electronic banking ToS by sharing credentials with a third party.

Re: Justice Department Sues to Block Visa's Proposed Acquisition of Plaid

#55

Post by sjg007 »

sjtgraham wrote: post #48
jjmorrison wrote: post #42

Earlier quoted context omitted.

Plaid is still (for some unknown reason) the only company that is able to do real time ACH transactions that bypass credit card companies in the US. All other companies still require long verification processes or high transaction fees.

Plaid doesn’t do ACH transactions, someone else does, e.g. Stripe, or Dwolla. They merely provide a means to verify account details instantly per NACHA rules. Plaid is planning to do ACH payments themselves and have a private beta.

They basically guarantee the funds to the merchant and reduce the likelihood that the cash won’t be there. The other side of the coin is providing insurance against fraudulent charges. This only really matters where physical goods are exchanged.

Re: Justice Department Sues to Block Visa's Proposed Acquisition of Plaid

#56

Post by judge2020 »

salawat wrote: post #54
cactus2093 wrote: post #10

Earlier quoted context omitted.

It is quite a fascinating scenario. Apple and Google wallet are integrated into the credit card processing infrastructure. So they don't compete with Visa, their payments still go over Visa's rails. Plaid's killer feature has always been their private access to APIs that the banks won't give to anyone else. It's essentially like they're using modern web APIs while everyone else is using snail mail (i.e. ACH, bank tra…

Technically, Plaid doesn't have access in a sanctioned way. You pretty much guaranteed violate any electronic banking ToS by sharing credentials with a third party.

Only if Plaid weren't a company that has contracts in place with every single bank they offer to access their services without being sued (despite the fact that the antique tech stacks these banks have don't allow Plaid to use oauth in most cases).

Re: Justice Department Sues to Block Visa's Proposed Acquisition of Plaid

#57

Post by fjni »

ceejayoz wrote: post #24
JadoJodo wrote: post #17

Earlier quoted context omitted.

I was under the impression that they didn’t have access to any APIs but that they simply took your credentials and scraped the bank webpage.

They do some of both. When I link a Capital One account, I get an OAuth-style flow and the ability to select which accounts I share directly on the C1 website. The sites I use this on show up as "Linked Apps" in my security settings in C1. Others use the credentials-based flow.

CapitalOne has (not even just for banking standards) an amazing developer platform. https://developer.capitalone.com

Re: Justice Department Sues to Block Visa's Proposed Acquisition of Plaid

#58

Post by MaxGabriel »

zelly wrote: post #49

Plaid is more of a monopoly than Visa is. Plaid is literally the only way to do ACH without microdeposit verification. There is no reason Plaid should have a monopoly on this. If banks opened up APIs for bank account verification, then anyone could compete with Plaid. As usual the Justice Department doesn't know what they're talking about.

Fwiw there are competitor services to Plaid, like Finicity

Re: Justice Department Sues to Block Visa's Proposed Acquisition of Plaid

#59

Post by madrox »

nobody9999 wrote: post #20

I was struck by this bit: 'If Plaid remained free to develop its competing payment platform, then “Visa may be forced to accept lower margins or not have a competitive offering."' My understanding is that Plaid would/could charge significantly less (up to 50% less) than Visa currently does. And that's the value of competition . Not necessarily as a race to the bottom (as we've seen in the airline industry, but that's…

I'm curious if this line of reasoning could extend to app stores and their 30%

Re: Justice Department Sues to Block Visa's Proposed Acquisition of Plaid

#60

Post by wholien »

This makes sense to be.

By the way, you can see Plaid's docs about money transfer here: https://plaid.com/docs/bank-transfers/ - don't think it's operational / available to the public yet tho

But definitely, if Plaid can create their own rails (using the bank accounts' ACH/Wire systems), it would definitely be competitive to Visa in certain situations. You can let your mind fly, and it would take some time to proliferate. But many online merchants already allow ACH-payments. This would make it even easier.

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