Why I Switched from Plaid to Stripe and Then Back to Plaid

A technical deep-dive into our journey with financial data providers and why we ultimately chose Plaid for Balance.

Why I Switched from Plaid to Stripe and Then Back to Plaid

When building Balance, one of the most critical decisions we faced was choosing a financial data provider. This choice would determine how reliably we could connect to users’ bank accounts, the quality of transaction data we’d receive, and ultimately, the user experience of our app. After experimenting with both Plaid and Stripe’s financial APIs, here’s our journey and the lessons we learned.

The Initial Choice: Why We Started with Plaid

When we first began developing Balance, Plaid was the obvious choice for several reasons:

Market Leadership and Reliability

Plaid had established itself as the de facto standard for financial data aggregation. With connections to over 11,000 financial institutions and a robust API, it offered the reliability we needed for a production application.

Comprehensive Coverage

Plaid’s extensive network meant we could support users with accounts at virtually any major bank, credit union, or financial institution in the United States. This was crucial for ensuring our app would work for all couples, regardless of where they banked.

Developer Experience

Plaid’s documentation was excellent, their SDKs were well-maintained, and their developer support was responsive. As a small team building our first fintech product, we needed a partner we could rely on.

The Experiment: Trying Stripe’s Financial APIs

As we scaled and began looking for ways to optimize costs and improve performance, we decided to experiment with Stripe’s financial APIs. Stripe had been expanding their fintech offerings, and we were curious about their capabilities.

What We Liked About Stripe

Cost Structure: Stripe’s pricing model was attractive, especially for high-volume applications. Their per-transaction pricing seemed more predictable than Plaid’s tiered approach.

Integration Simplicity: Since we were already using Stripe for payments, the idea of consolidating our financial service providers was appealing. Having everything in one dashboard would simplify our operations.

Real-time Updates: Stripe’s real-time webhook system promised more immediate transaction updates, which could improve the user experience.

The Challenges We Encountered

However, our experiment with Stripe revealed several limitations:

Limited Bank Coverage: While Stripe had been expanding their financial connections, their coverage wasn’t as comprehensive as Plaid’s. We found that many of our users’ banks weren’t supported, leading to a poor onboarding experience.

Data Quality Issues: The transaction categorization and data formatting weren’t as consistent as what we’d experienced with Plaid. This required more manual intervention and led to user confusion.

API Limitations: Stripe’s financial APIs were still maturing, and we encountered several edge cases that weren’t well-documented or supported.

The Decision: Why We Switched Back to Plaid

After several months of testing Stripe’s financial APIs, we made the decision to return to Plaid. Here’s why:

Superior Bank Coverage

Plaid’s extensive network of financial institutions meant we could support virtually all of our users without exceptions. This was crucial for maintaining a consistent user experience.

Better Data Quality

Plaid’s transaction categorization was more accurate and consistent. Their data included additional metadata that helped us provide better insights to our users.

Proven Reliability

Plaid’s infrastructure had proven itself over years of production use. We experienced fewer outages and more consistent performance compared to our time with Stripe.

Enhanced Security Features

Plaid’s security features, including their OAuth flow and data encryption, gave us and our users more confidence in the security of their financial data.

Key Lessons Learned

1. Don’t Optimize Prematurely

We initially switched to Stripe in part to optimize costs, but we learned that reliability and user experience should take precedence over cost optimization, especially in the early stages of product development.

2. Test Thoroughly

Our experiment with Stripe taught us the importance of thorough testing across different banks and account types. What works well for some users might not work for others.

3. Consider the Full Ecosystem

While consolidating providers can simplify operations, it’s important to consider whether a single provider can meet all your needs effectively. Sometimes, using specialized providers for different functions is the better choice.

4. User Experience Trumps Technical Convenience

Even though consolidating with Stripe would have simplified our technical stack, the impact on user experience was too significant to ignore. Users expect their financial apps to work with their banks, period.

What This Means for Balance Users

Our decision to stick with Plaid means that Balance users can:

  • Connect any bank account - We support over 11,000 financial institutions
  • Get accurate transaction data - Reliable categorization and consistent formatting
  • Experience fewer connection issues - Plaid’s proven infrastructure means more stable connections
  • Trust their data security - Plaid’s security standards are industry-leading

Looking Forward

While we’re committed to Plaid for now, we continue to monitor the fintech landscape for new developments. We’re particularly interested in:

  • Open Banking initiatives that might provide more direct bank connections
  • New financial data providers that could offer competitive alternatives
  • Regulatory changes that might affect how we access financial data

Conclusion

Our journey with financial data providers taught us that in fintech, reliability and user experience should be the primary drivers of technical decisions. While cost optimization and technical convenience are important, they shouldn’t come at the expense of core functionality.

For Balance users, this means you can trust that we’ll always prioritize your ability to connect your accounts and get accurate financial data. We’re committed to providing the best possible experience for couples managing their finances together.

At Balance, we believe that the best financial tools should work seamlessly with your existing financial life. That’s why we’ve invested in the most reliable financial data infrastructure available, so you can focus on what matters most - building a stronger financial future with your partner.