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 will have prevailed in court, but complex and “protracted litigation will probably take sizable time to completely 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 and consumers of this innovative option to Visa and increase entry barriers for future innovators.”
Plaid has observed a massive uptick in demand during the pandemic, and while the company was in a good position for a merger a season ago, Plaid chose to be an unbiased business in the wake of the lawsuit.
“While Plaid and Visa will have been an excellent mixture, we have made the decision to instead work with Visa as an investor and partner so we can fully concentrate 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 financial apps as Venmo, Robinhood and Square Cash to link users to their bank accounts. One major reason Visa was interested in buying Plaid was to access the app’s growing subscriber base and advertise them more services. Over the past year, Plaid claims it has grown its client base to 4,000 companies, up 60 % from a season ago.