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 companies would have prevailed in court, but “protracted and complex litigation will likely take substantial time to fully resolve.”
Antitrust regulators argued Visa’s acquisition of Plaid would eliminate a nascent competitor offering a “lower-cost choice for online debit payments” and “deprive American merchants and consumers of this revolutionary option to Visa and boost entry barriers for upcoming innovators.”
Plaid has noticed a huge uptick in demand throughout the pandemic, and while the business enterprise was in a comfortable position for a merger a season ago, Plaid decided to remain an unbiased business in the wake of the lawsuit.
“While Plaid and Visa will have been a good combination, we’ve made a decision to instead work with Visa as an investor and partner so we can fully 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 monetary apps like Venmo, Square Cash and Robinhood to associate users to their bank accounts. One key reason Visa was serious about buying Plaid was accessing the app’s growing customer base and sell them more services. Over the older year, Plaid states it has grown its client base to 4,000 companies, up sixty % from a season ago.