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 “protracted and complex litigation will likely take sizable 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 buyers of this innovative way to Visa and boost entry barriers for upcoming innovators.”
Plaid has seen a major uptick in demand during the pandemic, even though the business was in an inexpensive position for a merger a season ago, Plaid decided to remain an unbiased organization in the wake of the lawsuit.
“While Visa and Plaid will have been an effective mixture, we have made a decision to instead work with Visa as an investor as well as partner so we can completely concentrate on establishing the infrastructure to help fintech,” Plaid CEO Zach Perret said in a statement.
Plaid is a San Francisco fintech upstart used by popular monetary apps as Venmo, Square Cash along with Robinhood to connect users to their bank accounts. One key reason Visa was serious about buying Plaid was accessing the app’s growing subscriber base and advertise them more services. Over the past year, Plaid states it’s grown its customer base to 4,000 firms, up 60 % from a year ago.