Stripe vs Plaid: What You Need to Know About These SaaS Payment Integrations and Where Your Money Goes

Running an online business has lots of moving parts. You need to select the right platform, marketing tools, and customer relationship management solution (that’s just to name a few). But there’s at least one non-negotiable: you need a way to accept payment. 

That’s about the time folks start googling “stripe vs plaid.”

Two of the most popular SaaS payment applications are Stripe and Plaid, but picking the right tools can be confusing.

What do Stripe and Plaid do? How do they work with your website? Can I trust the security of these two providers? 

Here’s a run down of what Plaid and Stripe are used for, how they integrate with your existing ecommerce or financial platforms, and how they manage your money behind the scenes. 

Why do I need a SaaS payment integration? 

Whether buyers realize it or not, they’ve almost certainly used SaaS integrations like Plaid and Stripe. These payment services providers make it easy for businesses to accept payment through almost any method, including credit cards and pay later services. They work seamlessly to give your customers a good experience on your website.

Stripe: a payment processor

If you run an eCommerce business, you’ll need some type of system to accept your customer payments and send them to your bank. In this situation you’re looking for a payment processor. 

Stripe is a payment processor, meaning that it manages the technical requirements to accept credit or debit card payments and facilitates communication with the banks involved. Aside from card transactions, Stripe supports payments from buy now, pay later services and mobile wallets. 

Plaid: financial data transfer

Plaid, on the other hand, serves a different purpose. Developers use Plaid to handle the connection from their financial applications to their users’ bank or credit accounts. If you use Venmo, Square Cash, or Mint to visualize and manage your money, you’ve encountered Plaid. 

If your company helps your users organize their spending so they can set a budget, for example, Plaid is the right payment product for you.It will send your application information like transaction history and account balances. 

Stripe vs Plaid: How do these SaaS integrations work?

Stripe and Plaid take care of two important processes: authenticating accounts and accepting payment. 

Developers who are building an ecommerce platform or using one to run their store need to be able to charge ACH payments to their customers. To get set up, the developers need to register with Stripe and provide personal information, details about their business, contact information and a social security number to get an account. 

When a customer makes a purchase, Stripe checks the bank authorization. Plaid can take over the process from here. Setting up is much simpler: all you need to get started is a name and an email address. Stripe requests an authorization token from Plaid to authenticate users and lets them finish authorizing ACH payments through Stripe.  

Stripe vs Plaid: Pricing

Plaid is essentially an API that gathers and analyzes financial data. It’s focused on bank to bank transfers and facilitates payments, but doesn’t act as the whole payment service. 

 There are three different ways to pay fees with Plaid: 

1. Subscription fees: 

Like with many other SaaS tools, Plaid has a subscription payment model which varies in price depending on which products you want to use. This is how you pay for all the small transactions that connect Plaid to the user’s transaction information. 

2. One time fees: 

A new user on your application needs their identity verified and their account authorized through Plaid. This only needs to happen once. 

3. Flat per request fees: 

Plaid needs to check users’ accounts to see if there are enough funds for a transaction. Plaid charges flat fees for each request sent.

Stripe is a financial portal and a whole payment system. It offers more control over money transfers, compared to Plaid, which is mostly viewing information.

Stripe has fixed fees but it comes with everything you’re used to in SaaS, like customizations, plus ensures that you’re in PCI compliance.  Fixed fees are for online or in-person transactions.

1. Each online transaction costs 2.9% plus 30 cents/ transaction 
2. Each in-person transaction costs 2.7% plus 5 cents/ transaction

How secure are Plaid and Stripe?

Both Stripe and Plaid have been audited and designated as Level 1 PCI service providers. This requires annual compliance reviews and frequent security testing. 

Other security measures for these SaaS integrations include: 

• Encryption of all customer credit card numbers. These payment tools store the decryption information separately from credit card information. Stripe can’t actually see the credit card numbers. 
• Stripe and Plaid also require all online transactions use the HTTPS network which is more secure than HTTP. 
• Both companies have implemented a bug bounty program

Plaid has has a few more levels of security, like:

• Multi-factor authentication for extra security for your users’ accounts. 
• Plaid also let’s users control what data is shared with a company, if any.

How your money flows through

When a customer enters their credit card details online or at your in-person location, Stripe steps up and starts encrypting your credit card data. Stripe serves as the merchant, representing your company moving forward, instead of your bank having to play that role for each transaction. 

Stripe sends the encrypted data to the “acquirer”, which is a bank that processes merchant’s transactions through credit card networks like Visa. There’s also a similar process to connect to the buyer’s bank. The user’s bank then approves or denies the transaction. 

Finally, everything flows back with approvals to the payment gateway, Stripe and the customer can see in the portal whether the payment was accepted or declined. 

But where does Plaid come in? Plaid can help tokenize the ACH process for developers leaning on Stripe as a payment gateway. “By also using Plaid, Stripe developers can skip the micro-deposit authentication process delay, and instead authorize their users through Plaid,” the platform shares in its guide to ACH payments. “At its core, Plaid is an entrypoint for applications that want to authenticate users to their banking accounts.”

You’ll have to wait a few days before your customer’s money is processed and available in Stripe. You can set up payouts into your bank account on a schedule, like daily or monthly. 

Use SaaS integrations to handle all your payment needs

As SaaS integrations, Stripe and Plaid serve different purposes in the world of online payment processing. While Stripe is integral in processing customer transactions and getting you money, Plaid’s API is designed to reveal account information like transaction history and balances so companies can use that data to help their customers manage their credit, take out a loan, or plan their budget. 

For more information about how Quolum can help your company manage your entire SaaS tech stack, you can connect with us here.