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 business enterprises would have prevailed in court, but “protracted and complex litigation will likely take substantial time to totally resolve.”
Antitrust regulators argued Visa’s acquisition of Plaid would eliminate a nascent competitor offering a “lower-cost alternative for internet debit payments” and “deprive American merchants and buyers of this innovative alternative to Visa and increase entry barriers for upcoming innovators.”
Plaid has observed a major uptick in demand throughout the pandemic, even though the business was in a good position for a merger a season ago, Plaid decided to stay an impartial business in the wake of the lawsuit.
“While Visa and Plaid will have been a good mixture, we’ve decided to instead work with Visa as an investor as well as partner so we are able to completely give attention to establishing 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 as Venmo, Robinhood along with Square Cash to associate users to the bank accounts of theirs. One major reason Visa was serious about buying Plaid was accessing the app’s growing customer base and sell them more services. Over the previous year, Plaid states it’s developed its client base to 4,000 firms, up 60 % from a season ago.