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 will have prevailed in court, but “protracted and complex litigation will likely take sizable 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 customers of this innovative way to Visa and increase entry barriers for future innovators.”
Plaid has observed a big uptick in demand throughout the pandemic, and while the company was in an inexpensive position for a merger a season ago, Plaid made a decision to stay an unbiased organization in the wake of the lawsuit.
“While Visa and Plaid would have been a great mixture, we’ve made the decision to instead work with Visa as an investor as well as partner so we are able to totally focus on establishing 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, Square Cash and Robinhood to link users to their bank accounts. One important reason Visa was interested in buying Plaid was accessing the app’s growing customer base and sell them more services. Over the previous year, Plaid claims it’s developed its customer base to 4,000 companies, up sixty % from a season ago.