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 believes the companies would have prevailed in court, but “protracted and complex litigation will likely take substantial time to completely resolve.”
Antitrust regulators argued Visa’s acquisition of Plaid would eliminate a nascent competitor offering a “lower cost alternative for online debit payments” and “deprive American merchants as well as customers of this innovative option to Visa and boost entry barriers for upcoming innovators.”
Plaid has noticed a massive uptick in demand during the pandemic, and while the business enterprise was in an inexpensive position for a merger a year ago, Plaid chose to be an impartial business in the wake of the lawsuit.
“While Visa and Plaid would have been a good mixture, we have made the decision to instead work with Visa as an investor as well as partner so we can totally 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 popular financial apps like Venmo, Square Cash and Robinhood to link users to their bank accounts. One major reason Visa was keen on purchasing Plaid was to access the app’s growing client base and advertise them more services. Over the older year, Plaid says it’s developed its client base to 4,000 firms, up 60 % from a year ago.