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 believes the companies would have prevailed in court, but “protracted and complex litigation will probably take substantial time to fully resolve.”
Antitrust regulators argued Visa’s acquisition of Plaid would eliminate a nascent competitor offering a “lower-cost choice for online debit payments” and “deprive American merchants as well as consumers of this innovative alternative to Visa and boost entry barriers for future innovators.”
Plaid has seen a tremendous uptick in demand throughout the pandemic, even though the business enterprise was in a comfortable position for a merger a year ago, Plaid decided to remain an impartial business in the wake of the lawsuit.
“While Visa and Plaid would have been an effective mixture, we have decided to instead work with Visa as an investor and partner so we are able to completely give attention to creating the infrastructure to help fintech,” Plaid CEO Zach Perret said in a statement.
Plaid is actually a San Francisco fintech upstart used by well known financial apps as Venmo, Square Cash along with Robinhood to link users to the bank accounts of theirs. One major reason Visa was interested in purchasing Plaid was accessing the app’s growing subscriber base and sell them more services. Over the older year, Plaid claims it’s grown its client base to 4,000 firms, up sixty % from a year ago.