Open Banking and MCA: How Plaid and Bank Data Sharing Are Transforming Merchant Funding in 2026

The MCA industry has undergone a quiet technological revolution. While factor rates and holdback percentages have stayed familiar, the way funders collect and analyze financial data has fundamentally shifted. Open banking -- the ability to connect directly to a merchant's bank account with their permission -- has become standard practice in MCA underwriting, and brokers who do not understand it are leaving deals on the table.

Here is everything you need to know about open banking, how it affects your submissions, and how to use it to get your clients funded faster. If you are new to MCA terminology, see our MCA glossary for definitions of key terms used throughout this guide.

What Is Open Banking?

Open banking refers to the practice of financial data sharing through secure APIs (application programming interfaces). Instead of a merchant printing three months of bank statements and emailing PDFs, they simply log in to their bank account through a secure portal and grant read-only access to their transaction history.

Companies like Plaid, Finicity (owned by Mastercard), MX, and Yodlee sit in the middle -- they maintain connections with thousands of banks and credit unions, allowing any integrated platform to pull verified, real-time bank data directly from a merchant's account.

In the MCA world, this means a merchant can complete verification in 60 seconds instead of three days.

Why Funders Adopted Open Banking

The traditional MCA underwriting workflow was slow and error-prone:

1. Merchant pulls three to six months of bank statements
2. Merchant exports PDFs from online banking
3. Merchant emails statements to broker
4. Broker reviews and forwards to funder
5. Funder's underwriter manually reviews and categorizes transactions

This process took days and created multiple points of failure -- missing pages, altered statements, poor scan quality, and the simple reality that most merchants do not keep their statements organized.

Open banking solves every one of these problems:

• Speed: Data is available instantly upon merchant consent
• Accuracy: Numbers come directly from the bank, not from a PDF that can be edited
• Fraud prevention: Transaction history cannot be fabricated when pulled from the source
• Depth: 12 to 24 months of transaction history instead of only what the merchant chooses to share

For funders, open banking is not just convenient -- it is a competitive advantage. A funder who can underwrite in hours beats a funder who takes days every time. When you search our funder directory, look for ISO programs that highlight technology-driven underwriting as a differentiator.

The Major Open Banking Providers in MCA

Plaid

Plaid is the dominant player with connections to over 12,000 financial institutions across the United States. Most major MCA funders either built their own Plaid integration or use a platform that includes it. When you see a funding portal that asks merchants to connect their bank account, Plaid is almost certainly the underlying technology. Plaid's API returns standardized transaction data that makes automated underwriting straightforward to build.

Finicity (Mastercard)

Finicity, acquired by Mastercard in 2020, focuses heavily on the lending sector and includes robust cash flow analytics alongside raw transaction data. Some funders prefer Finicity because it delivers pre-built underwriting metrics -- average daily balance, revenue trends, NSF frequency -- rather than just raw transactions. This reduces the funder's own data processing overhead.

MX

MX is popular among fintechs and is particularly strong with credit unions. If your merchants bank with a regional credit union, MX often has better coverage than Plaid. The platform is also known for cleaner transaction categorization, which matters when underwriters are trying to identify business revenue versus personal transfers.

Yodlee (Envestnet)

One of the oldest data aggregators, Yodlee is common in legacy MCA platforms and enterprise-grade funding portals. Some of the larger, more established funders in the space built their technology stack around Yodlee before Plaid became the industry default.

What Funders See When Bank Data Is Connected

When a merchant connects their bank through open banking, the funder receives a comprehensive financial picture:

• All deposits: Every ACH, wire, check deposit, and credit card settlement, categorized by type and amount
• All withdrawals: Every payment, transfer, debit card transaction, and fee
• Running daily balance: The ending balance for every single day in the data window
• NSF and overdraft history: Returned items and overdraft fees appear as clearly labeled line items
• Account age: When the account was opened, which matters for time-in-business verification
• Existing advance payments: Regular ACH debits to known MCA funders surface immediately, revealing any stacking situations
• Payroll and operating expenses: Regular large ACH debits that indicate payroll or rent give underwriters context for the merchant's cost structure

This is significantly more detailed than a printed bank statement -- open banking data includes metadata and categorization that PDFs do not capture. To understand how funders use this data alongside other underwriting inputs, read our guide on what funders look for in bank statement analysis.

How Brokers Should Prepare Merchants for Open Banking

The biggest adoption challenge is merchant hesitation. The question every broker hears is some version of: "You want me to give you access to my bank account?" Here is how to handle it effectively.

Explain It Is Read-Only

Open banking connections are read-only. The funder and their data provider cannot initiate transactions, move money, make payments, or alter anything in the account. They can only read historical data. This is a critical distinction to make clearly upfront.

Compare It to a Credit Bureau Pull

When a merchant applies for any traditional loan, they authorize a credit pull -- access to their entire credit history with all lenders. Open banking is the same concept applied to bank data. It is a permission-based access that the merchant controls and can revoke at any time. Most merchants accept this framing immediately once they hear it.

Lead with Speed

Frame it as a choice: "The funder can review your application today and potentially approve you by end of day if we connect your bank account digitally. Or we collect statements manually and it takes several days. Which works better for you?" When merchants need funding urgently -- which is usually why they are talking to you -- the choice is obvious.

Address Security Concerns Directly

Major open banking providers use bank-level 256-bit encryption, never store the merchant's banking credentials, and maintain SOC 2 Type II certification. The secure portal is more protected than emailing PDF bank statements -- which travel unencrypted through email servers and sit in inboxes indefinitely.

The Broker's Advantage: Faster Deals and Better Pre-Qualification

Open banking does not just speed up the process -- it gives brokers better tools for pre-qualifying deals before submission. If a funder's portal allows broker access to submitted data, you can review a merchant's financial picture before forwarding to underwriting and catch problems early:

• Verify that average daily balance meets the funder's minimums
• Identify NSF patterns that are likely to trigger a decline at that specific funder
• Spot existing MCA holdbacks that indicate a stacking situation requiring a buyout strategy
• Confirm that stated revenue matches actual deposits -- a common misrepresentation that kills deals
• Recognize seasonal patterns that affect approval probability by time of year

This pre-screening capability lets you submit cleaner deals, build stronger relationships with ISO reps, and avoid wasted submissions. For more on structuring clean submissions, see our MCA deal packaging and submission guide.

If you want to run factor rate scenarios based on the data you pull, use our underwriting calculator to model different advance sizes, factor rates, and holdback percentages before approaching funders.

Privacy, Consent, and Legal Requirements

Open banking in the United States is governed by a regulatory framework that crystallized with the CFPB's Section 1033 rulemaking finalized in late 2024. Under this framework:

• Merchants must explicitly consent to data sharing before any connection is initiated
• Merchants have the right to revoke access at any time
• Data must be used only for the stated purpose -- in this case, underwriting an advance
• Third-party data providers cannot sell or share the data outside the approved transaction

As a broker, you should ensure that any platform you use has merchants click through a consent screen before initiating a connection. Never initiate an open banking connection based only on a verbal agreement -- the consent needs to be documented. Every reputable platform creates this audit trail automatically, but it is worth confirming with each funder whose portal you use.

Open Banking and MCA Fraud Prevention

MCA fraud involving altered bank statements became a serious problem in the years following COVID. Bad actors submitted digitally manipulated PDFs that appeared legitimate but showed fabricated deposit histories. Open banking largely solves this problem.

If a merchant submits PDF statements that do not match their open banking data, the discrepancy is immediately visible. Funders who cross-reference both sources catch fraud that manual review consistently misses. For a broader look at fraud red flags to watch for, review our MCA fraud detection guide.

For legitimate merchants, this development is genuinely good news. Funders who are confident in their data quality can take on deals that previously required conservative declines because the transaction data was unverifiable. A small business with a complex cash flow history that looks messy on a printed statement may present cleanly and compellingly when the data is structured and categorized by the open banking platform.

When Open Banking Does Not Work

Open banking is not a universal solution. Common situations where it falls short include:

Bank Not Supported

While Plaid connects to over 12,000 institutions, some smaller community banks and credit unions are not in the network. In these cases, traditional bank statement collection remains necessary. Funders typically have a manual review process for these situations, though approval timelines extend accordingly.

Business Banking Portal Limitations

Some large national banks maintain separate systems for personal and business banking. The business banking portal may not connect as reliably as the personal banking side, or may require a different authentication flow that introduces friction. This is improving as banks invest in API infrastructure, but it remains an issue in 2026.

Multi-Entity Businesses

Merchants who run revenue through multiple entities or bank accounts need to connect each account separately. This adds complexity to the process and sometimes confuses merchants who do not understand why one account login is not enough. Walk these merchants through the process step by step.

Merchant Refuses

Some merchants refuse open banking regardless of how you explain it. This is worth noting: merchants who are reluctant to share bank data often have a reason. Proceed with PDF collection, but be more thorough in your manual review. Refusal is not a red flag on its own, but it does remove a fraud-prevention layer that funders value.

Historical Data Depth

Most open banking connections pull 12 to 24 months of data. If a funder needs older transaction history for a specific reason -- comparing performance during a prior economic period, for example -- PDF statements may be required to supplement.

How to Use Open Banking Data to Negotiate Better Terms

Here is a broker strategy many miss: strong open banking data can directly support a better deal offer.

When your merchant's connected data shows consistent deposits with low NSF rates, growing revenue trends, and a clean repayment history on any existing advances, lead with that data when positioning the deal to funders. You are not just submitting statements -- you are presenting a structured, verified financial picture that reduces funder risk.

Funders who see lower underwriting risk may respond with better factor rates, longer terms, or higher advance amounts. When you are shopping a deal to multiple funders, merchants with clean open banking profiles are easier to place competitively. Create your broker account to access verified funders who use technology-driven underwriting and can move quickly on clean submissions.

Evaluating Funders on Open Banking Capabilities

When assessing ISO programs to add to your panel, open banking capability is a legitimate evaluation criterion. Questions to ask:

• Does the funder's portal support open banking, or only PDF upload?
• Which provider do they use -- Plaid, Finicity, MX, or proprietary?
• How quickly can they turn around a decision once data is connected?
• Do they use open banking data to inform pricing, or only for verification?
• Can brokers access the portal to review data before formal submission?

Funders who use open banking data analytically -- feeding transaction categorization and cash flow metrics directly into underwriting models -- can often approve deals that slower, manual underwriters decline for insufficient documentation. When you need to place a deal quickly for a merchant in a specialized sector like healthcare or construction, a tech-forward funder with open banking integration can be the difference between funded and declined.

The Future: Continuous Monitoring and Dynamic Advances

The next evolution in MCA technology is continuous bank monitoring. Rather than a one-time data pull at underwriting, some funders are beginning to offer advance structures where the merchant's bank account activity is monitored on an ongoing basis. This enables several innovations:

• Automatic renewal offers triggered when merchants reach payoff thresholds
• Dynamic holdback rate adjustments when merchant revenue drops significantly
• Early warning systems that give funders and brokers time to work proactively with a merchant before default
• Streamlined renewals that require no new documentation because the data relationship is already established

For brokers focused on building recurring revenue through renewals, understanding which funders offer continuous monitoring creates a long-term retention advantage. Merchants with established open banking relationships tend to renew with the same funder, keeping your commission stream intact.

Practical Takeaway for Brokers

Open banking has moved from a novelty to an expectation in MCA underwriting. Brokers who understand it close deals faster, submit cleaner packages, and provide a noticeably better experience for their merchants.

To make open banking part of your standard workflow:

1. Confirm that every funder on your panel supports open banking and know which provider they use
2. Prepare a 30-second explanation of open banking to use with hesitant merchants -- read-only access, same concept as a credit pull, faster funding
3. Use data previews when available to pre-screen deals before submission and catch problems early
4. Lead with open banking-enabled submissions any time a merchant needs funding quickly
5. When placing difficult deals, prioritize funders with sophisticated open banking integrations who can underwrite from the data rather than just verify it

The brokers closing the most deals in 2026 combine strong funder relationships with operational efficiency. Open banking is one of the fastest ways to cut your time-to-funding, reduce declined submissions, and differentiate yourself from brokers still relying on emailed PDFs. Search our funder directory to find verified funders with the technology capabilities your merchants deserve.