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 believes the business enterprises would have prevailed in court, but “protracted and complex litigation will likely 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 internet debit payments” and “deprive American merchants and buyers of this innovative way to Visa and increase entry barriers for future innovators.”
Plaid has observed a big uptick in need throughout the pandemic, even though the company was in a good position for a merger a year ago, Plaid decided to stay an independent company in the wake of the lawsuit.
“While Plaid and Visa would have been an excellent combination, we’ve made a decision to instead work with Visa as an investor and partner so we are able to fully give attention to establishing the infrastructure to support fintech,” Plaid CEO Zach Perret said in a statement.
Plaid is a San Francisco fintech upstart used by well known financial apps like Venmo, Robinhood and Square Cash to associate users to their bank accounts. One important reason Visa was keen on buying Plaid was to access the app’s growing customer base and advertise them more services. Over the past year, Plaid claims it’s grown its customer base to 4,000 companies, up sixty % from a season ago.