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 believes the businesses would have prevailed in court, but “protracted and complex litigation will likely take substantial 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 option to Visa and increase entry barriers for future innovators.”
Plaid has noticed a tremendous uptick in demand during the pandemic, although the business was in a comfortable position for a merger a year ago, Plaid decided to be an unbiased company in the wake of the lawsuit.
“While Plaid and Visa will have been an excellent combination, we have made a decision to instead work with Visa as an investor and partner so we are able to completely focus on building the infrastructure to support fintech,” Plaid CEO Zach Perret said in a statement.
Plaid is a San Francisco fintech upstart used by popular financial apps like Venmo, Square Cash along with Robinhood to link users to their bank accounts. One major reason Visa was interested in purchasing Plaid was to access the app’s growing client base and sell them more services. Over the older year, Plaid states it has developed its customer base to 4,000 firms, up sixty % from a season ago.