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 will have prevailed in court, but complex and “protracted litigation will probably take sizable time to totally resolve.”
Antitrust regulators argued Visa’s acquisition of Plaid would eliminate a nascent competitor offering a “lower cost alternative for internet debit payments” and “deprive American merchants as well as consumers of this revolutionary option to Visa and increase entry barriers for upcoming innovators.”
Plaid has seen a major uptick in need throughout the pandemic, even though the business enterprise was in a good position for a merger a year ago, Plaid made a decision to stay an unbiased company in the wake of the lawsuit.
“While Plaid and Visa would have been an excellent mixture, we’ve made the decision to instead work with Visa as an investor and partner so we are able to completely concentrate on creating the infrastructure to help fintech,” Plaid CEO Zach Perret said in a statement.
Plaid is a San Francisco fintech upstart used by popular monetary apps as Venmo, Robinhood and Square Cash to connect users to their bank accounts. One key reason Visa was keen on purchasing Plaid was accessing the app’s growing client base and advertise them more services. Over the past year, Plaid claims it has developed its customer base to 4,000 firms, up sixty % from a year ago.