Visa and fintech startup Plaid ditched plans for a $5.3 billion merger Tuesday after a Department of Justice antitrust lawsuit had threatened to block the deal.
Visa CEO Al Kelly said in a statement he thinks the businesses will have prevailed in court, but complex and “protracted litigation will likely take sizable time to totally resolve.”
Antitrust regulators argued Visa’s acquisition of Plaid would eliminate a nascent competitor offering a “lower cost option for internet debit payments” and “deprive American merchants as well as buyers of this revolutionary option to Visa and improve entry barriers for upcoming innovators.”
Plaid has observed a tremendous uptick in demand during the pandemic, even though the business was in a comfortable position for a merger a year ago, Plaid chose to be an impartial company in the wake of the lawsuit.
“While Visa and Plaid would have been an effective combination, we’ve made a decision to instead work with Visa as an investor as well as partner so we are able to totally give attention to building the infrastructure to help fintech,” Plaid CEO Zach Perret said in a statement.
Plaid is actually a San Francisco fintech upstart used by popular financial apps as Venmo, Square Cash and Robinhood to connect users to the bank accounts of theirs. One major reason Visa was serious about buying Plaid was accessing the app’s growing customer base and sell them more services. Over the previous year, Plaid says it’s developed its customer base to 4,000 firms, up sixty % from a season ago.