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 “protracted and complex litigation will likely take sizable time to totally 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 as well as customers of this innovative option to Visa and increase entry barriers for upcoming innovators.”
Plaid has noticed a huge uptick in demand during the pandemic, although the company was in an inexpensive position for a merger a year ago, Plaid chose to be an unbiased business in the wake of the lawsuit.
“While Plaid and Visa would have been an effective combination, we have made the decision to instead work with Visa as an investor and partner so we are able to fully 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 popular financial apps like Venmo, Square Cash along with Robinhood to connect users to the bank accounts of theirs. One major reason Visa was serious about purchasing Plaid was accessing the app’s growing client base and promote them more services. Over the past year, Plaid says it has grown its customer base to 4,000 firms, up sixty % from a season ago.