Open-banking platform Dwolla, which allows businesses to integrate into the U.S. instant payments rails, will expand its partnership with data firm Plaid.
The new integration will bring Plaid’s instant account verification and risk assessment functionalities to Dwolla’s pay-by-bank operations as soon as next year. Businesses will also be able to onboard to Dwolla using Plaid, a platform well known to many organizations.
The new solution is expected to interface with accounts at more than 12,000 U.S. financial institutions, according to a news release.
“Our expanded partnership with Plaid represents a significant step forward in our mission to simplify and streamline pay-by-bank payments for businesses,” said Dave Glaser, CEO of Dwolla. “By integrating Plaid’s advanced account verification and risk assessment features into our open-banking services, we’re providing a single, unified solution that addresses the complex needs of modern enterprises in the evolving payments landscape.”
Significant Deals
The expansion of the Plaid partnership is the latest in a series of significant deals for Dwolla. Earlier this year, Dwolla announced an agreement with Visa that would bring its open-banking platform to the credit card giant’s infrastructure. That deal came on the heels of Dwolla’s agreement with cybersecurity company MX Technologies.
Dwolla’s platform integrates into both U.S. instant payment rails—RTP and FedNow—in a single interface. In addition to real-time settlement, instant payments offer businesses a more secure payment method that can include much more transactional data.
A Prime Position
Dwolla is in a prime position to benefit from the Consumer Financial Protection Bureau’s new rules that should give the U.S. open-banking industry a clearer regulatory framework. The CFPB’s rules are designed to protect consumers but also aimed at increasing innovation in financial services.
Although the CFPB’s new regulations are mostly about giving customers the freedom to switch between financial institutions whenever they want, the agency specifically cited instant payments. The CFPB believes pay-by-bank can be a better option for merchants and consumers because it is more cost-effective than credit cards. Instant payments are also more secure because they require the consumer to authorize the transaction.
