Network effects are at the core of the transaction and its valuation.
Ben Thompson shows how and why in his Stratechery analysis, from which these summary images are borrowed.
The risk, as Ben points out, is with the tech and its security.
And it’s a risk that extends out past the narrow confines of Visa and/or Plaid.
Note, in the network images above, that Visa at the center of the market, is one of several options for all involved.
Note, on the other hand, the finance apps depicted in the bottom right of the Plaid network illustration, for whom Plaid is and has been the go-to connectivity solution.
These finance apps are also networks, potentially exposed to the same failure risk, by extension.
It’s known that network effects can sometimes happen in the negative, as the virality can spread for growth as well as diminution.
When networks interlink, that same effect could spread between them, up or down.