August 2023 Summaries

The European Commission has proposed measures to modernize payment services, including the Payment Services Regulation (PSR) and the Payment Services Directive 3 (PSD3), which aim to tackle challenges such as payment fraud, enhance consumer rights, and promote an API-first approach. The new regulation encourages the use of APIs for data sharing and innovation in the financial sector, mandating their usage for access and providing a narrow set of exceptions. This will drive the market towards APIs, enabling secure and efficient data exchange between Payment Service Providers (PSPs) and Account Servicing Payment Service Providers (ASPPs). The regulation also aims to remove obstacles hindering open banking adoption, such as double redirects during authentication, and empowers PSPs to share fraud-related information. By promoting an API-first landscape, PSD3 and PSR promise a more dynamic, secure, and customer-centric financial ecosystem in the European Union, unlocking possibilities for innovation and convenience in financial services.

Plaid has launched a Data Partner Dashboard to help data partners of all sizes onboard and launch API connectivity faster. The dashboard provides comprehensive documentation, dedicated tooling for building, testing, and launching integrations, and the Validator tool for testing OAuth or built endpoints. With more than 3,200 organizations accessing API connectivity through Plaid, this solution helps data partners save time and resources while ensuring consumers have the financial data connectivity they expect.

Plaid is expanding its income verification suite by adding more automation and anti-fraud measures to help lenders make smarter decisions with real-time income information. The platform now enables lenders to verify borrower income in three ways, including through bank connections, payroll connections, or uploaded pay stubs or bank statements. This provides access to accurate and up-to-date income data, including improved categorization of income streams and real-time notifications of income changes. Additionally, Plaid has added measures to detect document tampering during the income verification process, using machine learning technology to identify over 30 fraud signals. The platform also offers a suite of services that streamline the loan lifecycle, including cash flow underwriting, identity verification, and disbursement management. With these improvements, lenders can now offer near-instant disbursements via ACH or Real-Time Payment rails, giving consumers the option of getting paid faster.

The FCA's regulatory technical standards (RTS) for European Union countries have been revised to extend the 90-day "reauthentication rule" to a period of 180 days, allowing end users to enjoy secure connectivity with fintech applications and services without frequent interruptions. This change enables users to experience fewer disruptions while maintaining control over their shared data. The update differs from the UK's re-authentication process, which now allows Third Party Providers like Plaid to handle consent management. The adjustments took effect on December 5th, 2022, with account servicing payment service providers required to conform by July 25th, 2023, and Plaid updated its systems accordingly to enable EU customers to benefit from the change.

In May & June 2023, Plaid introduced numerous enhancements to its flagship products such as Identity Verification, Link, and new products like Plaid Beacon. These updates include more institution logos for easier bank search, improved search functionality, global expansion of Link, streamlined OAuth guidance, reduced latency in product data extraction, a better funding experience with microdeposits, a new Signal Dashboard for payment flow optimization, enhanced Identity Match feature, faster risk decisions, improved customer sweep reconciliation, and updates to the Payouts API. Additionally, Plaid introduced AI-enabled merchant recognition, income source parsing, new Investments categorizations for Robinhood, a redesigned data partner dashboard, added support for Wisely and Mountain America Credit Union, an anti-fraud consortium, one-click identity verification, bank account ownership checks, synthetic and stolen identity signals, improved IDV validations, and real-time income data.