Here at Swan, we've made it nearly 3 years without having our customers use Plaid to connect their bank account.
We're considering finally turning it on. While I hate the idea of helping a surveillance company get even more data, the reality is that reversal fraud is a plague on Bitcoin companies, and Plaid will help Swan to better manage the risk.
Of course, we'll continue to allow connecting manually via routing/acct #s.
Can anyone talk me out of launching with Plaid?
What do you use currently for the connection with banks?
we have customers manually enter account/routing numbers
And so the Plaid interaction would be used only for the account numbers discovery and verification? Or what would be Plaid responsible for?
Either way the privacy implications suck - it's bad enough to create the KYC connection with the bank, with plaid it's also exported into centralizing entity that makes a business out of your data (vs banks being generally incompetent with that in their own)
Well said. That is the exact downside (further enriching a massive honeypot).
The value proposition to Swan is predictive fraud scoring. We already do this on our own (as a bitcoin company, you NEED to), but we enrich our data by tapping into Plaid's honeypot to get a score, which is ultimately based on whether the connected bank account has defrauded other platforms.
We wouldn't be pulling much besides the customer's acct/routing + that score.
But you would be "pushing" the users to provide their data to Plaid, right?
So I'd definitely say don't do it, but the evaluation is on you. How is the fraud affecting you? Are people defrauding your business or is it rather that you don't want to enable fraudsters (as defined by Plaid) to use your platform? What are other options? Thinking outside of the box!
Since you are bank connected solution already, you are already part of the problem of excluding large number of earthlings via KYC. I'm not saying you are a bad actor or that your service is not appreciated, but we also have to be clear about that.
have you had a lot of transaction reversal fraud? also, keeping the ability to continue to manually enter your account numbers wouldn't stop the fraud though, right? this doesn't seem like it changes anything besides making it easier for customers to link bank accounts at the cost of surveillance.
Yes, Bitcoin (more broadly, crypto) companies are a huge target for scammers. Buy Bitcoin, withdraw, call the bank to reverse the transaction, repeat.
Honestly, we (Swan) have done a really good job managing this as compared to our peers, but we're always wanting to do better. A single $10,000 reversal is 1000's of customers worth of lost revenue...
Good point re: scammers could continue entering routing/acct. We'd be put in a position where we're only offer faster unlock times for people verifying with Plaid (which, to my original point, perpetuates the surveillance/honeypot element of this).
It's a tough spot to be in.
