The House of Plaid looks nothing like the House of Morgan

If you were still hung up on the breakup of Plaid and Visa, you now have closure.

Plaid has a new boo: Altimeter Capital, which led the fintech company's $425 million round this week. It's poor form to keep score, particularly after a breakup, but worth noting that Plaid's new valuation is said to be north of $13 billion. That's more than double the $5.3 billion that Visa agreed to pay last year.

Plaid outgrew the Visa deal. What's surprising is that it did so largely in the background. Its customers—Coinbase, Robinhood, Venmo, etc.—are the stars of the digital finance expansion that the pandemic triggered. Plaid and other infrastructure providers like Marqeta and Stripe are the hugely talented supporting characters.

We'll get into that. But first, some history.

At lunchtime on Sept. 16, 1920, a mysterious bomb exploded outside of the Wall Street offices of JP Morgan & Co., killing dozens and injuring more than a hundred people.

The building retains scars of the incident, but it wasn't destroyed. Its architect subsequently described 23 Wall Street "as near being bombproof as a structure can be."

The House of Morgan, as it is known, remains influential. The building's two-foot-thick walls jut out into an intersection on Wall Street like a stern father. A stark, chiaroscuro photograph of the building by Paul Strand is in the Whitney Museum of American Art.

To the era's ultrarich, there was comfort to its form. A nearly bombproof building is as good a place as any to stash your cash.

And for a century, banks largely took this approach to building their brands: big buildings, logos everywhere you looked, fancy credit cards. That's how you earned trust.

Plaid and its ilk have grown without any of Morgan's bravado. Not only are they inconspicuous, they are invisible. Most people have probably never heard of Plaid or Stripe, but they have almost certainly used their products.

This inscrutability is a feature, and it has ushered in an era that some prescient fintech investors have anticipated.

Andreessen Horowitz general partner Angela Strange made the case in 2019 that most of us will be working in financial services soon, even if we don't change jobs. She argued that finance would soon be so embedded in software that a distinction between the two would be largely arbitrary.

That same year, Facebook launched Facebook Pay and Apple came out with its credit card. But big tech no longer appears to be the center of the action.

Much in the way that AWS made it possible for anyone to cheaply start a software company, companies like Plaid and Stripe have provided the infrastructure for fintech startups and non-fintech startups to act like banks.

With Stripe's help, Clubhouse this week added payments in a bid to attract creators to the audio-only app. Commerce is becoming a core feature of social media: Shopify partnered with TikTok last year to bring its sellers onto the video-sharing app.

Grocery delivery titan Instacart is planning a credit card offering powered by JPMorgan Chase, The Wall Street Journal reported this week. DoorDash is expected to follow suit.

Every platform seems to want a slice of what their users are buying. And customers will soon expect that commerce should come to them.

In his annual letter this week, JPMorgan Chase CEO Jamie Dimon weighed in on the upstarts:

"Fintech's ability to merge social media, use data smartly and integrate with other platforms rapidly (often without the disadvantages of being an actual bank) will help these companies win significant market share," he wrote.

In other words, we're living in the era of embedded finance, ready or not. Banking services are ditching the financial system to be everywhere and nowhere at once.

Stripe's transactions and Plaid's integrations are an obvious start, but they're just a start, PitchBook emerging tech analyst Robert Le tells me. Lending, insurance, risk management: It's all on the table.

Take loans, for instance. The ubiquitous buy-now-pay-later buttons of Klarna, Afterpay and Affirm may soon disappear from checkout screens. The rationale is that customers may prefer a seamless experience with a trusted retailer rather than a third party. Australia's Limepay is betting on this approach with a white-label alternative for sellers.

Or insurance: Say you're buying a car or renting an apartment online. Why shop separately for insurance when you can tack it on at checkout?

Blockchain and cryptocurrency startups are raising record sums to build products that obliterate the line between software and money. Decentralized finance has emerged as one of crypto's buzziest segments, though it's still early days.

Being in the background has its advantages. You can buy glasses from Warby Parker without needing to understand or trust Stripe's payment network. Consumer brands and social media can do the hard work of winning trust and making sales. Fintech startups can handle the rest.

As Le puts it: "These services work best when they're invisible."

Featured image by epapijon/Getty Images