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 companies will have prevailed in court, but complex and “protracted litigation will likely take substantial time to fully resolve.”
Antitrust regulators argued Visa’s acquisition of Plaid would eliminate a nascent competitor offering a “lower-cost alternative for online debit payments” and “deprive American merchants as well as buyers of this innovative way to Visa and improve entry barriers for future innovators.”
Plaid has noticed a huge uptick in need during the pandemic, even though the company was in a comfortable position for a merger a year ago, Plaid made a decision to stay an independent business in the wake of the lawsuit.
“While Visa and Plaid would have been an effective mixture, we have decided to instead work with Visa as an investor and partner so we can completely 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 popular financial apps as Venmo, Square Cash along with Robinhood to associate users to the bank accounts of theirs. One key reason Visa was serious about purchasing Plaid was to access the app’s growing customer base and sell them more services. Over the previous year, Plaid claims it’s grown its customer base to 4,000 companies, up sixty % from a season ago.