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 sizable 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 customers of this innovative alternative to Visa and improve entry barriers for future innovators.”
Plaid has noticed a big uptick in need during the pandemic, even though the business enterprise was in a good position for a merger a year ago, Plaid chose to stay an unbiased business in the wake of the lawsuit.
“While Plaid and Visa would have been an excellent mixture, we have made the decision to instead work with Visa as an investor and partner so we are able to completely focus on establishing 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, Square Cash and Robinhood to link users to their bank accounts. One important reason Visa was keen on purchasing Plaid was to access the app’s growing client base and promote them more services. Over the past year, Plaid claims it’s grown its customer base to 4,000 companies, up 60 % from a year ago.