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 companies will have prevailed in court, but complex and “protracted 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 online debit payments” and “deprive American merchants and customers of this innovative option to Visa and boost entry barriers for upcoming innovators.”
Plaid has observed a huge uptick in need throughout the pandemic, and while the business enterprise was in a comfortable position for a merger a season ago, Plaid chose to be an independent organization in the wake of the lawsuit.
“While Plaid and Visa would have been a good combination, we have decided to instead work with Visa as an investor and partner so we are able to fully 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 popular financial apps as Venmo, Robinhood and Square Cash to connect users to the bank accounts of theirs. One major reason Visa was serious about purchasing Plaid was accessing the app’s growing subscriber base and advertise them more services. Over the past year, Plaid claims it’s developed its client base to 4,000 companies, up sixty % from a year ago.