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 business enterprises will have prevailed in court, but complex and “protracted litigation will probably take sizable time to completely resolve.”
Antitrust regulators argued Visa’s acquisition of Plaid would eliminate a nascent competitor offering a “lower cost choice for internet debit payments” and “deprive American merchants and buyers of this innovative option to Visa and increase entry barriers for upcoming innovators.”
Plaid has noticed a major uptick in need during the pandemic, and while the business enterprise was in a comfortable position for a merger a season ago, Plaid made a decision to remain an unbiased 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 focus on establishing the infrastructure to support 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 link users to their bank accounts. One important reason Visa was keen on buying Plaid was accessing the app’s growing client base and sell them more services. Over the previous year, Plaid states it has grown its customer base to 4,000 firms, up 60 % from a year ago.