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 will have prevailed in court, but complex and “protracted 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 online debit payments” and “deprive American merchants as well as customers of this revolutionary way to Visa and boost entry barriers for future innovators.”
Plaid has noticed a massive uptick in demand during the pandemic, and while the company was in a comfortable position for a merger a season ago, Plaid decided to be an impartial business in the wake of the lawsuit.
“While Plaid and Visa will have been a great combination, we’ve made a decision to instead work with Visa as an investor as well as partner so we are able to 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 as Venmo, Robinhood along with Square Cash to associate users to their bank accounts. One key 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 claims it’s developed its client base to 4,000 companies, up sixty % from a year ago.