Payment-processing company Nuvei (Nasdaq: NVEI) (TSX: NVEI) and Plaid, an account-linking startup, are expanding their existing partnership to support a wider range of businesses and uses.
The expansion will enable Nuvei’s clients to accept payments for multiple uses. Those will include recurring payments and payouts, and to serve additional verticals within e-commerce, such as utilities and B2B.
Nuvei’s Instant Bank Transfer combines Nuvei’s speed of bank payment processing with Plaid’s user experience.
Nuvei is a Canadian FinTech company baesd in Montreal, while Plaid is an American data-network startup that enables consumers to connect their bank accounts to more than 8,000 apps and services.
Nuvei’s Instant Bank Transfer combines Nuvei’s speed of bank payment processing with Plaid’s user experience for bank account linking infrastructure, which it describes as seamless and secure. Plaid claims its linking services have been used by approximately one in three US consumers with a bank account to connect to digital financial services.
Nuvei CEO and chair Philip Fayer commented: “Consumers are increasingly turning to online bank transfer payments, but their user experience has often been poor. Nuvei Instant Bank Transfer eliminates the barriers to adoption, democratizing this payment method for consumers and offering merchants a genuine revenue-driving alternative to card payments.”
Fayer claimed that Nuvei’s partnership with Plaid makes online bank transfer payments even more seamless for millions of US consumers, which is why the company is excited to be expanding its partnership to target a broader range of e-commerce verticals.
Nuvei and Plaid also intend to scale their partnership globally before the end of this year. Nuvei claims it is involved in local acquiring in 47 markets, while Plaid claims a network covering 12,000 financial institutions across the United States, Canada, the United Kingdom and Europe.
Local acquiring makes use of financial institutions within a specific region in which a company operates, and helps increase the number of approved foreign transactions.
Nuvei and Plaid maintain that the reach they will achieve by partnering up will enable businesses in multiple regions across the globe to enhance their online checkout through pay-by-bank experiences.
According to proprietary data compiled for Nuvei, bank-based payment is already the third most popular online payment method in the US, behind credit and debit cards. Almost a quarter (23 percent) of all US consumers are considering using bank-based payments for general e-commerce payments in the next 12 months, Nuvei says.
For merchants, the benefits of bank-based payments include faster settlement times, fewer disputed transactions, and reduced operating costs, resulting in higher profit margins and accelerated revenue growth.
While bank-based payments are typically not guaranteed, the Nuvei, Plaid partnership offers merchants the ability to assess transaction risk in real time and reduce return rates through Plaid Signal, a network-based machine-learning model.
This includes confirming the consumer has available funds to complete a transaction, and eliminating transactions that are falsely declined by banks.
Historically, adoption of bank-based payments has been hampered by the cumbersome manual experience of entering account and routing numbers, as well as general security concerns around consumers providing sensitive banking details online. In the study conducted for Nuvei, 35 percent of consumers expressed security concerns as a key barrier to bank-based payment adoption.
Nuvei first partnered with Plaid in 2021, allowing sports betting and online gambling players to withdraw funds from their gaming accounts instantly. Nuvei said its partnership with Plaid gave access to 11,500 banking connections or linked accounts, and deposit and withdrawal— including one-click deposits and payouts—for returning players.
Both Nuvei and Plaid have been aggressive about extending different forms of banking within Canada as well as globally, ranging from e-commerce to open banking. Nuvei entered a deal to acquire Paya Holdings, an American payments platform provider, for $1.7 billion CAD ($1.3 billion USD) in January.
According to Nuvei, Paya’s integration aimed to diversify the former’s business with markets that Paya currently serves, such as B2B goods and services, health care, non-profit organization, education, government, and utilities.
For its part, Plaid entered a partnership in June with the Royal Bank of Canada (RBC) and US FinTech company Yodlee, which is owned by Envestnet, to offer RBC clients a private form of open banking.
In practice, this means RBC users are able to share their financial data securely across Yodlee’s more than 1,500 third-party applications. With Plaid’s integration, RBC customers can connect their credentials with Plaid’s data network.