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 probably take substantial time to completely resolve.”
Antitrust regulators argued Visa’s acquisition of Plaid would eliminate a nascent competitor offering a “lower-cost option for internet debit payments” and “deprive American merchants and customers of this revolutionary alternative to Visa and increase entry barriers for future innovators.”
Plaid has seen a massive uptick in need during the pandemic, although the business was in a good position for a merger a year ago, Plaid made a decision to be an independent business in the wake of the lawsuit.
“While Visa and Plaid would have been a good combination, we have made a decision to instead work with Visa as an investor as well as partner so we are able to fully give attention to building the infrastructure to support fintech,” Plaid CEO Zach Perret said in a statement.
Plaid is actually a San Francisco fintech upstart used by popular monetary apps as Venmo, Robinhood along with Square Cash to connect users to their bank accounts. One major reason Visa was keen on purchasing Plaid was accessing the app’s growing client base and sell them more services. Over the previous year, Plaid claims it has developed its customer base to 4,000 firms, up sixty % from a season ago.