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 would have prevailed in court, but “protracted and complex 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 alternative for online debit payments” and “deprive American merchants as well as customers of this revolutionary alternative to Visa and increase entry barriers for future innovators.”
Plaid has seen a massive uptick in demand during the pandemic, although the business enterprise was in a comfortable position for a merger a season ago, Plaid decided to be an impartial company in the wake of the lawsuit.
“While Plaid and Visa would have been a great mixture, we have made the decision to instead work with Visa as an investor as well as partner so we can totally focus on establishing 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 like Venmo, Square Cash and Robinhood to connect users to the bank accounts of theirs. One important reason Visa was interested in purchasing Plaid was to access the app’s growing client base and advertise them more services. Over the older year, Plaid states it has developed its customer base to 4,000 companies, up 60 % from a season ago.