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 would have prevailed in court, but complex and “protracted 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 online debit payments” and “deprive American merchants as well as customers of this innovative alternative to Visa and improve entry barriers for future innovators.”
Plaid has observed a massive uptick in need during the pandemic, and while the business enterprise was in an inexpensive position for a merger a season ago, Plaid made a decision to be an unbiased business in the wake of the lawsuit.
“While Plaid and Visa will have been an excellent mixture, we’ve made a decision to instead work with Visa as an investor and partner so we can completely concentrate on creating 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 as Venmo, Square Cash and Robinhood to connect users to their bank accounts. One important reason Visa was interested in buying Plaid was accessing the app’s growing customer base and advertise them more services. Over the previous year, Plaid claims it has developed its customer base to 4,000 firms, up sixty % from a year ago.