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 business enterprises would have prevailed in court, but complex and “protracted litigation will likely take substantial 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 and consumers of this revolutionary way to Visa and improve entry barriers for upcoming innovators.”
Plaid has seen a tremendous uptick in demand throughout the pandemic, even though the business enterprise was in an inexpensive position for a merger a year ago, Plaid made a decision to be an independent organization in the wake of the lawsuit.
“While Plaid and Visa will have been an effective combination, we have made a decision to instead work with Visa as an investor as well as partner so we can totally concentrate on 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 link users to the bank accounts of theirs. One major reason Visa was keen on purchasing Plaid was to access the app’s growing subscriber base and promote them more services. Over the older year, Plaid claims it’s developed its client base to 4,000 companies, up 60 % from a season ago.