Plaid Adds Direct Deposit Switching Services Partner
You can now use direct deposit switching to allow lenders to verify your income through pay stubs, bank statements and payroll data.
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Plaid has chosen Pinwheel to provide complementary payroll data services for customers of its Income product and has chosen the payroll-focused intermediary software firm as a preferred provider for direct deposit switching services.
To enhance the Income product, Pinwheel will provide consumer-permissioned payroll data that allows lenders to verify their borrowers' income through pay stubs, bank statements, and payroll data.
Plaid – a financial data aggregator that allows users to connect their bank accounts to apps such as Venmo, SoFi, Acorns and Chime – said that it will now refer customers in need of direct deposit switching services to Pinwheel.
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According to Pinwheel’s website, automated direct deposit switching allows customers to log into their payroll or income platform through their banking app and specify the amount of money they want to route to a new bank account on payday.
In 2021, Plaid paused work on its own Deposit Switch product that aimed to help customers easily switch direct deposit accounts, according to a Protocol report. The company at the time then shifted its focus to Plaid Income, the article said. The move reportedly opened the way to forming partnerships with providers like Pinwheel.
A connection to 1,700-plus payroll service providers
“Pinwheel's additional payroll connectivity will allow more consumers to access products best designed to meet their needs, and banks and fintechs can serve a wider variety of customers they otherwise wouldn't have been able to without access to data that showcases their creditworthiness," said Brian Karimi-Pashaki, partnerships lead at Pinwheel.
Pinwheel connects to more than 1,700 payroll service providers and gig platforms, covering 80% of U.S workers and more than 1.5 million employers, according to the company’s website.
According to Plaid’s website, once users connect their financial accounts to apps with Plaid, they maintain control over who to share that data with.
Earlier this year, Kiplinger reported on IRS statistics showing that using direct deposit is a good way to protect your federal tax refund from being lost or stolen. The same electronic transfer system that processes your refund is used to transfer 98% of Social Security and Veterans Affairs funds to millions of Americans, as reported.
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