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 business enterprises would have prevailed in court, but complex and “protracted litigation will likely take sizable time to totally 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 revolutionary option to Visa and boost entry barriers for future innovators.”
Plaid has seen a big uptick in demand during the pandemic, even though the company was in a comfortable position for a merger a season ago, Plaid decided to be an unbiased business in the wake of the lawsuit.
“While Visa and Plaid will have been an excellent mixture, we have made the decision to instead work with Visa as an investor and partner so we can totally concentrate on creating the infrastructure to support fintech,” Plaid CEO Zach Perret said in a statement.
Plaid is actually a San Francisco fintech upstart used by well known financial apps as Venmo, Square Cash along with Robinhood to connect users to their bank accounts. One key reason Visa was keen on buying Plaid was to access the app’s growing client base and promote them more services. Over the past year, Plaid claims it has grown its client base to 4,000 firms, up 60 % from a season ago.