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 businesses would have prevailed in court, but complex and “protracted 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 and buyers of this innovative alternative to Visa and improve entry barriers for upcoming innovators.”
Plaid has seen a massive uptick in demand throughout the pandemic, although the company was in an inexpensive position for a merger a year ago, Plaid decided to remain an unbiased organization in the wake of the lawsuit.
“While Plaid and Visa would have been an effective combination, we have made a decision to instead work with Visa as an investor and partner so we are able to completely focus on establishing the infrastructure to help fintech,” Plaid CEO Zach Perret said in a statement.
Plaid is actually a San Francisco fintech upstart used by popular financial apps as Venmo, Square Cash along with Robinhood to connect users to the bank accounts of theirs. One important reason Visa was interested in buying Plaid was accessing the app’s growing customer base and advertise them more services. Over the past year, Plaid claims it has developed its customer base to 4,000 companies, up 60 % from a season ago.