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 businesses would have prevailed in court, but complex and “protracted 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 choice for internet debit payments” and “deprive American merchants as well as consumers of this innovative alternative to Visa and increase entry barriers for upcoming innovators.”
Plaid has seen a big uptick in need throughout the pandemic, although the company was in a comfortable position for a merger a year ago, Plaid chose to stay an independent business in the wake of the lawsuit.
“While Visa and Plaid will have been an effective mixture, we have made the decision to instead work with Visa as an investor as well as partner so we can fully concentrate on building 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 monetary apps like Venmo, Square Cash and Robinhood to link users to their bank accounts. One major reason Visa was interested in purchasing 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 client base to 4,000 companies, up sixty % from a season ago.