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 businesses would have prevailed in court, but complex and “protracted litigation will likely take substantial time to totally resolve.”
Antitrust regulators argued Visa’s acquisition of Plaid would eliminate a nascent competitor offering a “lower-cost alternative for internet debit payments” and “deprive American merchants and buyers of this revolutionary alternative to Visa and improve entry barriers for upcoming innovators.”
Plaid has seen a massive uptick in demand during the pandemic, and while the business enterprise was in a comfortable position for a merger a year ago, Plaid decided to stay an impartial company in the wake of the lawsuit.
“While Plaid and Visa will have been an effective combination, we have made a decision to instead work with Visa as an investor and partner so we can completely concentrate on creating the infrastructure to support fintech,” Plaid CEO Zach Perret said in a statement.
Plaid is actually a San Francisco fintech upstart used by popular financial apps as Venmo, Robinhood and Square Cash to link users to the bank accounts of theirs. One key reason Visa was interested in purchasing Plaid was to access the app’s growing subscriber base and sell them more services. Over the previous year, Plaid claims it’s developed its client base to 4,000 companies, up sixty % from a season ago.