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 would 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 consumers of this innovative alternative to Visa and improve entry barriers for future innovators.”
Plaid has noticed a big uptick in demand throughout the pandemic, even though the business was in a good position for a merger a year ago, Plaid chose to remain an unbiased organization in the wake of the lawsuit.
“While Plaid and Visa will 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 totally give attention to establishing the infrastructure to help fintech,” Plaid CEO Zach Perret said in a statement.
Plaid is a San Francisco fintech upstart used by well known financial apps like Venmo, Square Cash along with Robinhood to connect users to their bank accounts. One key reason Visa was keen on buying Plaid was to access the app’s growing client base and sell them more services. Over the older year, Plaid says it’s developed its customer base to 4,000 firms, up 60 % from a year ago.