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 will have prevailed in court, but “protracted and complex 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 and customers of this innovative alternative to Visa and increase entry barriers for future innovators.”
Plaid has observed a massive uptick in need during the pandemic, even though the company was in a good position for a merger a year ago, Plaid decided to stay an independent organization in the wake of the lawsuit.
“While Plaid and Visa would have been an effective mixture, we have made the decision 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 like Venmo, Robinhood and Square Cash to link users to their bank accounts. One key reason Visa was serious about buying Plaid was accessing the app’s growing client base and promote them more services. Over the previous year, Plaid states it has developed its client base to 4,000 companies, up 60 % from a season ago.