Thousands of apps and financial institutions use Plaid to share data from your bank account. For example, digital wallets, payment apps, investment apps, and budgeting apps all utilize Plaid.
But before you enter your banking login information or account and routing number, you may be wondering: Is Plaid safe?
I’ve used Plaid myself to connect with several services, including digital wallets, mobile banking and budgeting apps. After further research, I put together this guide to share my experience.
Table of Contents
- What Is Plaid?
- How Does Plaid Work?
- Is Plaid Safe?
- How To Manage Your Shared Data
- Final Thoughts: Should You Trust Plaid?
Below, I’ll share everything you need to know about the free financial service. I’ll include how Plaid secures your information, how to check which apps have access to your data and additional ways to ensure your data is safe.
1. What Is Plaid?
Plaid is a legitimate independent company that was founded in 2013 and now works with thousands of financial institutions and financial apps/websites. According to the company’s website, “Plaid makes it easy to securely connect your bank to the apps you want to use.”
In fact, Plaid can connect with over 12,000 financial institutions and powers over 8,000 apps and services. These apps include mobile banking, saving and investing, budgeting, business finances, peer-to-peer payments and online lending services.
Additionally, Plaid is completely free to use. Because of its convenience, network and security, Plaid is a popular choice for fintech companies when it comes to data sharing.
In the following sections, you’ll find more detailed information on how Plaid secures your data, what data it can access, how to stop sharing your data and more.
2. How Does Plaid Work?
Plaid works as a third-party service for thousands of financial apps and institutions. Through Plaid, users can securely share their bank account information and allow those apps to access necessary information.
For example, budgeting apps (such as YNAB and Rocket Money) use Plaid to access and display current balances, recent transactions and more. Digital wallets and payment apps (such as Venmo) use Plaid to facilitate transactions.
Plaid’s direct customers are the apps and services that utilize it, which means it’s completely free to use for consumers.
Additionally, you won’t have to create a separate account. Once you’ve agreed to share your data through the app you’ve downloaded, you won’t need to interact directly with Plaid.
When you download an app powered by Plaid, you’ll see a screen similar to the one below while creating your account.
From there, you’ll be able to select your financial institution from the list. Then, you’ll be able to connect your account in one of three ways:
- In most cases, you’ll be redirected to your bank’s website where you can directly enter your mobile banking login information. With this method, Plaid does not store your login information. It’s also the fastest way to connect your accounts and begin using the app or service you’ve signed up for.
- In some cases, you may be asked to enter your mobile banking login information directly to Plaid. With this method, Plaid will store your login information, but it will still never be shared with the app or service you’ve signed up for.
- Alternatively, you may be able to manually enter your routing and account numbers. With this method, your account will either be verified immediately or you’ll receive “micro-deposits” for manual verification. This method can take 1-2 business days.
Once you’ve connected your account and granted permission to share your data with the intended app/service, you won’t need to do anything else. According to the company’s website, Plaid will “collect the data to power the services you’ve chosen and, when requested, securely share it with the app you’re using and establish a secure connection that you control.”
You can learn more about how Plaid connects to your financial accounts here.
To learn more about how Plaid works for consumers, visit the company’s website.
3. Is Plaid Safe?
In short: Yes, Plaid is safe. It’s a legitimate, independent company that powers thousands of fintech apps and securely connects with financial institutions across the United States, Canada, the UK and Europe.
Plaid’s goal is to enable consumers to safely share financial data with designated apps and services while protecting them against fraud and abuse. Here’s how Plaid protects your data:
- Data encryption
- Cloud infrastructure
- Robust monitoring
- Multi-factor authentication
- Independent security testing
You can learn more about how Plaid manages data here.
Additionally, Plaid is transparent about what data is being collected and shared with the apps and services you authorize. You can update your permissions at any time through the Plaid Portal or directly through your financial institution. In the next section, I’ll take a closer look at how to do this.
4. How To Manage Your Shared Data
When you first sign up for an app or service and connect your bank account through Plaid, you’ll see a full list of the information that Plaid will be able to access before agreeing. Shared data will likely include your account details and balances, personal details (name, address, contact information), bank statements, tax documents and transactions.
Most apps powered by Plaid will require this information to offer their services. For example, Venmo will need to know where to deposit/withdraw funds, and budgeting apps will need access to your daily transactions to track and categorize your spending.
After you’ve agreed to share necessary data, you can change your permissions at any time. There are two ways that you can stop sharing data/information with apps and services that you’ve connected with Plaid: Plaid Portal and your financial institution.
Your Financial Institution
I found that the best way to see which apps have access to your banking information is directly through your bank. If you’ve set up online banking, you can log in directly on your financial institution’s app or website and find “manage third-party access” or “linked apps” in your settings.
From there, you’ll see a list of connected apps and services that you’ve shared data with.
While the process will vary among banks, you should be able to manage or stop data sharing with selected apps. If you haven’t set up online banking, or if you aren’t sure that every app/service is listed, contact your financial institution directly.
Plaid Portal
To manage your shared data directly through Plaid, you can create an account for Plaid Portal. I used this method to see which apps I have been sharing data with and found that creating an account was easy and free.
Once you’ve logged in, you’ll see a list of apps and accounts associated with your phone number and/or email address. You can view connected apps under the “Overview” section. Under “Accounts,” you’ll see the financial accounts you’ve linked to Plaid.
From here, click on matched apps or banks to verify the connection and further manage shared data. When I did this, I was directed to my financial institution’s website to log in.
Once you’ve verified the connection, you can use Plaid Portal to stop sharing information with the selected app. Click on the app or service, and under “Manage connections,” click “Disconnect app.”
Further, you can delete your financial account data from Plaid’s system entirely. This will prevent any connected apps from accessing any additional data via Plaid for those accounts. To do this, choose your financial institution under “Accounts” in Plaid Portal and click “Delete from Plaid.”
You can learn more about Plaid Portal on the company’s website.
Unfortunately, this method requires additional data sharing and creating a separate account. Additionally, not all connected apps or services may be listed. Plaid Portal currently does not support several types of app connections.
For these reasons, I recommend managing your shared data directly through your financial institution.
5. Final Thoughts: Should You Trust Plaid?
Ultimately, Plaid is relatively safe to use. It’s free and convenient for consumers while providing secure connections to your financial institution. Plaid partners with over 8,000 apps, which makes it a well-established option for connecting consumers with services.
Plaid uses industry-standard security measures, and no major data breaches have been reported. Plus, the company is transparent about the data being shared, and you can manage or stop sharing data at any time.
If you do choose to share your data with an app or service via Plaid, consider these additional tips for keeping your information safe:
- Stop sharing data with apps and services you’re no longer using. If you aren’t consistently using an app that you’ve shared your data with, be sure to stop sharing your data. You can manage data sharing with third-party apps by logging into your online bank account directly through your financial institution. You can also manage data shared via Plaid with Plaid Portal. If you’re no longer using any app powered by Plaid, you can also delete your information from Plaid’s system using Plaid Portal.
- Contact apps/services directly to delete existing data. In addition to preventing future data from being shared, directly contact any companies that you have shared data with in the past when you’re no longer using their app or service. You can request that your previous/current information be removed from their system in addition to future data.
- Set up multi-factor authentication. If you’re using an app or service that has access to your financial information, set up any additional layers of security available. Many finance apps offer optional passcode protections and two-factor authentication methods to verify your identity.
- Set up a separate account for peer-to-peer payment apps. Money expert Clark Howard cautions against linking your main bank account to an app like Venmo, CashApp or PayPal. Instead, he recommends opening a separate online-only checking account and funding it with the bare minimum. “Then, the only money at risk is whatever you have in that online account,” says Clark.
For more ways to safely manage your finances and protect your personal information, visit Clark.com.
