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 would have prevailed in court, but “protracted and complex 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 option for internet debit payments” and “deprive American merchants as well as buyers of this innovative alternative to Visa and increase entry barriers for upcoming innovators.”
Plaid has seen a big uptick in demand throughout the pandemic, although the business 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 effective combination, we have made a decision to instead work with Visa as an investor and partner so we can totally give attention to 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 the bank accounts of theirs. One key reason Visa was serious about purchasing Plaid was accessing the app’s growing client base and promote them more services. Over the past year, Plaid claims it has grown its customer base to 4,000 companies, up 60 % from a season ago.