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 companies will have prevailed in court, but complex and “protracted litigation will probably 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 internet debit payments” and “deprive American merchants and buyers of this innovative alternative to Visa and boost entry barriers for future innovators.”
Plaid has noticed a tremendous uptick in demand during the pandemic, even though the company was in a comfortable position for a merger a season ago, Plaid decided to be an unbiased company in the wake of the lawsuit.
“While Visa and Plaid will have been a good mixture, we have decided to instead work with Visa as an investor as well as partner so we can completely concentrate on creating the infrastructure to support fintech,” Plaid CEO Zach Perret said in a statement.
Plaid is a San Francisco fintech upstart used by well known financial apps as Venmo, Square Cash along with Robinhood to connect users to their bank accounts. One important reason Visa was keen on buying Plaid was to access the app’s growing customer base and promote them more services. Over the older year, Plaid claims it’s grown its client base to 4,000 firms, up 60 % from a season ago.