Plaid acquires ID verification platform Cognito

Open Banking payments platform Plaid has acquired identity verification and compliance platform Cognito.

Plaid said that Cognito’s products are used by many of its own customers, such as Affirm, Brex, Current, Republic and Wyre.

Cognito was founded in 2014 and is backed by a number of Silicon Valley investors, including Y Combinator, Lightspeed and Khosla Ventures.

In a blog post, Plaid CEO Zach Perret wrote: “Identity verification is one of three critical parts of a complete onboarding experience, along with account connection (connecting your bank/financial data to an app) and account funding (moving money into an app), which Plaid provides today.

Plaid CEO Zach Perret

“With Cognito, the next major step in our journey is to help developers build the best and most seamless onboarding experiences across all of these areas. This means simplifying every step of the consumer journey from their first interaction during signup, to the first magical moment delivered by that product – the first time sending money to a friend, or the first time trading a stock or cryptocurrency.”

The terms of the deal remain undisclosed but, according to reports, it is worth $250 million.

Alain Meier, CEO of Cognito, wrote in a blog post: “I’m extremely excited to publicly share that Cognito has been acquired by Plaid. Together, we will continue building the products that power the identity verification and compliance processes across the fintech ecosystem.”

He added: “Cognito’s trajectory over the past decade, starting from outsiders peering into the identity space and ending with a crisp and confident vision for the future, is why I sincerely believe that Plaid is a perfect home for Cognito.

“Plaid believes in our vision to drastically reduce the overhead of onboarding customers for all fintech applications. With Plaid backing us, we will continue to build amazing products for years to come.”

Addressing current customers, Meier said that “Cognito’s products are not going anywhere”.

In October 2021, Plaid launched a ‘payment partner ecosystem’ which included longtime partners Square and Railsbanks, with the aim to boost account-to-account (A2A) payment transactions.