Visa as well as 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 businesses would have prevailed in court, but “protracted and complex 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 online debit payments” and “deprive American merchants and buyers of this revolutionary option to Visa and boost entry barriers for upcoming innovators.”
Plaid has observed a massive uptick in need throughout the pandemic, even though the business was in a comfortable position for a merger a year ago, Plaid chose to stay an impartial 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 can completely focus on building the infrastructure to support fintech,” Plaid CEO Zach Perret said in a statement.
Plaid is actually a San Francisco fintech upstart used by well known monetary apps like Venmo, Robinhood along with Square Cash to connect users to their bank accounts. One key reason Visa was interested in buying Plaid was to access the app’s growing client base and promote them more services. Over the past year, Plaid says it has grown its customer base to 4,000 companies, up 60 % from a season ago.