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 companies would 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 as well as consumers of this revolutionary way to Visa and boost entry barriers for future innovators.”
Plaid has seen a massive uptick in need throughout the pandemic, and while the company was in a good position for a merger a year ago, Plaid decided to remain an independent organization in the wake of the lawsuit.
“While Plaid and Visa will have been a great combination, we’ve made the decision to instead work with Visa as an investor and partner so we can completely give attention to establishing the infrastructure to help fintech,” Plaid CEO Zach Perret said in a statement.
Plaid is actually a San Francisco fintech upstart used by popular monetary apps like Venmo, Square Cash and Robinhood to link users to the bank accounts of theirs. One important reason Visa was keen on purchasing Plaid was accessing the app’s growing customer base and advertise them more services. Over the older year, Plaid claims it’s grown its customer base to 4,000 companies, up 60 % from a season ago.