Visa as well as 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 believes the business enterprises will 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 choice for internet debit payments” and “deprive American merchants and consumers of this revolutionary way to Visa and improve entry barriers for future innovators.”
Plaid has noticed a huge uptick in need during the pandemic, and while the company was in a comfortable position for a merger a season ago, Plaid chose to stay an unbiased business in the wake of the lawsuit.
“While Visa and Plaid would have been an excellent 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 building 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 financial apps like Venmo, Robinhood and Square Cash to connect users to their bank accounts. One important reason Visa was interested in purchasing Plaid was to access the app’s growing customer base and advertise them more services. Over the older year, Plaid says it’s grown its customer base to 4,000 firms, up 60 % from a season ago.