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 business enterprises will have prevailed in court, but “protracted and complex 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 and buyers of this revolutionary way to Visa and boost entry barriers for future innovators.”
Plaid has noticed a big uptick in demand during the pandemic, and while the business was in a comfortable position for a merger a season ago, Plaid made a decision to stay an independent organization in the wake of the lawsuit.
“While Visa and Plaid would have been a good mixture, we’ve decided to instead work with Visa as an investor and partner so we can totally concentrate 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 financial apps as Venmo, Square Cash and Robinhood to link users to their bank accounts. One key reason Visa was keen on buying Plaid was accessing the app’s growing customer base and promote them more services. Over the past year, Plaid claims it has grown its client base to 4,000 companies, up sixty % from a season ago.