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 thinks the business enterprises will have prevailed in court, but “protracted and complex litigation will likely take substantial 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 as well as consumers of this innovative way to Visa and increase entry barriers for upcoming innovators.”
Plaid has observed a massive uptick in demand throughout the pandemic, even though the business was in a comfortable position for a merger a year ago, Plaid decided to stay an unbiased organization in the wake of the lawsuit.
“While Plaid and Visa would have been a good mixture, we’ve made the decision to instead work with Visa as an investor and partner so we are able to totally concentrate on establishing the infrastructure to help fintech,” Plaid CEO Zach Perret said in a statement.
Plaid is a San Francisco fintech upstart used by well known monetary apps as Venmo, Square Cash and Robinhood to connect users to the bank accounts of theirs. One important reason Visa was keen on buying Plaid was accessing the app’s growing client base and sell them more services. Over the past year, Plaid claims it has grown its customer base to 4,000 firms, up 60 % from a year ago.