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 complex and “protracted 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 option for internet debit payments” and “deprive American merchants and customers of this revolutionary way to Visa and increase entry barriers for future innovators.”
Plaid has seen a big uptick in demand during the pandemic, even though the business enterprise was in a comfortable position for a merger a season ago, Plaid decided to remain an independent organization in the wake of the lawsuit.
“While Visa and Plaid would have been a good combination, we have decided to instead work with Visa as an investor as well as partner so we are able to completely focus on building the infrastructure to help fintech,” Plaid CEO Zach Perret said in a statement.
Plaid is actually a San Francisco fintech upstart used by well known financial apps like Venmo, Square Cash and Robinhood to associate users to their bank accounts. One important reason Visa was serious about purchasing Plaid was accessing the app’s growing client base and promote them more services. Over the previous year, Plaid says it has grown its client base to 4,000 firms, up 60 % from a year ago.