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 businesses will have prevailed in court, but complex and “protracted litigation will probably take substantial time to completely resolve.”
Antitrust regulators argued Visa’s acquisition of Plaid would eliminate a nascent competitor offering a “lower cost option for online debit payments” and “deprive American merchants as well as buyers of this revolutionary way to Visa and improve entry barriers for upcoming innovators.”
Plaid has observed a tremendous uptick in need throughout the pandemic, although the business was in a comfortable position for a merger a season ago, Plaid made a decision to remain an independent company in the wake of the lawsuit.
“While Plaid and Visa would have been a good combination, we’ve decided to instead work with Visa as an investor and partner so we can completely 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 like Venmo, Robinhood along with Square Cash to connect users to the bank accounts of theirs. One key reason Visa was interested in buying Plaid was to access the app’s growing customer base and sell them more services. Over the older year, Plaid says it’s grown its customer base to 4,000 companies, up 60 % from a year ago.