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 will have prevailed in court, but “protracted and complex litigation will probably take substantial 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 as well as consumers of this innovative option to Visa and increase entry barriers for future innovators.”
Plaid has seen a big uptick in demand throughout the pandemic, even though the business enterprise was in a good position for a merger a season ago, Plaid chose to be an independent business in the wake of the lawsuit.
“While Visa and Plaid would have been an excellent mixture, we’ve made a decision to instead work with Visa as an investor and partner so we can fully concentrate on creating the infrastructure to support fintech,” Plaid CEO Zach Perret said in a statement.
Plaid is a San Francisco fintech upstart used by well known financial apps like Venmo, Robinhood along with Square Cash to link users to the bank accounts of theirs. One major reason Visa was keen on purchasing Plaid was accessing the app’s growing client base and advertise them more services. Over the previous year, Plaid says it’s developed its client base to 4,000 companies, up 60 % from a year ago.