Visa as well as 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 “protracted and complex 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 alternative for online debit payments” and “deprive American merchants as well as consumers of this revolutionary alternative to Visa and increase entry barriers for upcoming innovators.”
Plaid has seen a tremendous uptick in need during the pandemic, even though the company was in a good position for a merger a season ago, Plaid made a decision to be an independent organization in the wake of the lawsuit.
“While Plaid and Visa 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 fully concentrate on creating the infrastructure to support fintech,” Plaid CEO Zach Perret said in a statement.
Plaid is actually a San Francisco fintech upstart used by well known financial apps as Venmo, Square Cash along with Robinhood to connect users to their bank accounts. One key reason Visa was keen on buying Plaid was to access the app’s growing subscriber base and promote them more services. Over the past year, Plaid claims it’s developed its client base to 4,000 companies, up sixty % from a season ago.