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 likely take sizable time to completely 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 customers of this revolutionary alternative to Visa and boost entry barriers for upcoming innovators.”
Plaid has observed a major uptick in demand during the pandemic, even though the business was in a comfortable position for a merger a year ago, Plaid made a decision to remain an independent company in the wake of the lawsuit.
“While Plaid and Visa will have been a great combination, we have made a decision to instead work with Visa as an investor as well as partner so we can fully concentrate on establishing the infrastructure to support fintech,” Plaid CEO Zach Perret said in a statement.
Plaid is actually a San Francisco fintech upstart used by popular financial apps as Venmo, Robinhood and Square Cash to associate users to their bank accounts. One important reason Visa was keen on buying Plaid was to access the app’s growing subscriber base and promote them more services. Over the previous year, Plaid says it has developed its customer base to 4,000 companies, up sixty % from a season ago.