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 businesses will have prevailed in court, but complex and “protracted litigation will likely 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 online debit payments” and “deprive American merchants as well as customers of this innovative way to Visa and increase entry barriers for upcoming innovators.”
Plaid has observed a massive uptick in need during the pandemic, even though the business was in an inexpensive position for a merger a year ago, Plaid decided to be an impartial business in the wake of the lawsuit.
“While Plaid and Visa will have been an effective mixture, we have made a decision to instead work with Visa as an investor as well as partner so we are able to totally give attention to establishing 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 their bank accounts. One important reason Visa was keen on buying Plaid was accessing the app’s growing subscriber base and sell them more services. Over the past year, Plaid claims it has developed its customer base to 4,000 companies, up 60 % from a year ago.