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 thinks the businesses would have prevailed in court, but complex and “protracted litigation will probably take substantial 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 customers of this innovative way to Visa and boost entry barriers for upcoming innovators.”
Plaid has noticed a massive uptick in demand during the pandemic, even though the company was in a comfortable position for a merger a season ago, Plaid made a decision to remain an independent business in the wake of the lawsuit.
“While Plaid and Visa will have been a good combination, we’ve made a decision to instead work with Visa as an investor as well as partner so we can fully focus on creating 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, Robinhood and Square Cash to connect users to their bank accounts. One major reason Visa was interested in purchasing Plaid was to access the app’s growing client base and promote them more services. Over the older year, Plaid claims it’s developed its client base to 4,000 firms, up 60 % from a season ago.