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 business enterprises will have prevailed in court, but “protracted and complex 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 internet debit payments” and “deprive American merchants as well as buyers of this innovative alternative to Visa and boost entry barriers for future innovators.”
Plaid has noticed a massive uptick in demand during the pandemic, although the business enterprise was in a good position for a merger a year ago, Plaid chose to be an unbiased company in the wake of the lawsuit.
“While Visa and Plaid would have been an excellent combination, we have decided to instead work with Visa as an investor and 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 as Venmo, Robinhood and Square Cash to connect users to their bank accounts. One key reason Visa was serious about buying Plaid was accessing the app’s growing client base and sell them more services. Over the previous year, Plaid claims it’s grown its customer base to 4,000 firms, up 60 % from a year ago.