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 probably 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 online debit payments” and “deprive American merchants as well as buyers of this revolutionary alternative to Visa and boost entry barriers for future innovators.”
Plaid has noticed a massive uptick in demand throughout the pandemic, although the business was in an inexpensive position for a merger a year ago, Plaid decided to stay an independent business in the wake of the lawsuit.
“While Visa and Plaid would have been an excellent mixture, we’ve made the decision to instead work with Visa as an investor and partner so we are able to totally focus on establishing the infrastructure to help fintech,” Plaid CEO Zach Perret said in a statement.
Plaid is a San Francisco fintech upstart used by well known financial apps as Venmo, Square Cash along with Robinhood to connect users to the bank accounts of theirs. One major reason Visa was keen on purchasing Plaid was to access the app’s growing client base and promote them more services. Over the older year, Plaid claims it’s developed its client base to 4,000 firms, up 60 % from a year ago.