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 believes the business enterprises will have prevailed in court, but complex and “protracted litigation will probably take sizable time to fully resolve.”
Antitrust regulators argued Visa’s acquisition of Plaid would eliminate a nascent competitor offering a “lower-cost option for online debit payments” and “deprive American merchants as well as consumers of this revolutionary way to Visa and improve entry barriers for upcoming innovators.”
Plaid has noticed a major uptick in demand throughout the pandemic, even though the company was in an inexpensive position for a merger a year ago, Plaid chose to be an independent business in the wake of the lawsuit.
“While Visa and Plaid will have been an effective mixture, we have made the decision to instead work with Visa as an investor as well as partner so we are able to fully focus on creating the infrastructure to help fintech,” Plaid CEO Zach Perret said in a statement.
Plaid is actually a San Francisco fintech upstart used by well known financial apps like Venmo, Square Cash and Robinhood to link users to the bank accounts of theirs. One important reason Visa was interested in purchasing Plaid was to access the app’s growing client base and advertise them more services. Over the previous year, Plaid claims it has grown its client base to 4,000 firms, up 60 % from a year ago.