Potential winners and losers line up as Plaid pushes deeper into payments

So Plaid now calls itself a payments company. It was only a matter of time, really.

Earlier today, the data and connectivity startup announced a new payments partner ecosystem that will extend its existing payments infrastructure and make ACH bank transfers a more attractive alternative to credit card transactions.

But the big winners here are merchants, who now have a low-cost alternative to avoid credit card processing fees that cut into their margins.

Before today, most of Plaid’s payments activity centered around improving customer onboarding and account funding through its payment initiation service. But the launch of the payments ecosystem heralds a much deeper integration with the payment flow of its partners and what could be a fundamental reshaping of how certain transactions are made.

Here’s why they’re building the ecosystem and who stands to benefit from it.

Building a new payments network

This payments ecosystem is really the culmination of a number of moves the company has made over the years.

First, Plaid enabled data to be connected between fintech apps and financial institutions. It subsequently created an identity product so customers could verify users are who they say they are. Then, it built a tool to check the balance of an account to ensure it has sufficient funds to make a money transfer.

It also added a payments initiation service that leverages the other tools to help customers onboard new users and add funds to their accounts quicker. And finally, it built a tool to assess the risk of bank transfers and minimize ACH returns.