In a development that may significantly reshape the U.S. financial services landscape, Plaid will now compensate JPMorgan Chase (JPMC) for accessing consumers’ banking data.

Plaid’s aggregation platform links banks and their customers with third-party services including peer-to-peer payments, credit score monitoring, and crypto trading.

To date, fintech companies have enjoyed unrestricted access to consumer data. However, Plaid will operate under a new agreement with JPMC that introduces charges for data access while also establishing stringent guidelines for protecting customer information.

A Near Inevitable Shift

The transition to this model appeared almost unavoidable following recent disclosures from JPMorgan Chase about the increasing number of API requests it receives from fintech firms. The bank reported receiving 1.89 billion such requests in a single month, with most coming from aggregators.

While only a minority of these requests were initiated by consumers themselves, the high volume posed challenges to JPMorgan Chase’s systems and raised concerns about data exploitation and potential fraud risks.

The Rationale Behind the Change

The move has faced significant opposition. The existing framework, which leans towards open banking, is characterized by free data access. Imposing fees might jeopardize smaller fintech companies’ innovation and competitiveness, leading to increased centralization in the industry.

In an email response, Plaid explained its agreement to pay JPMC fees as a means of maintaining long-standing relationships with banks, ensuring that all Plaid services remain accessible to customers without changing current contracts or introducing additional costs for users.

Plaid stressed its commitment to advocating for consumer rights regarding data access and continued efforts to push for regulatory reforms under Section 1033, despite the challenges this rule faces.