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 companies will have prevailed in court, but complex and “protracted litigation will likely take substantial time to totally resolve.”
Antitrust regulators argued Visa’s acquisition of Plaid would eliminate a nascent competitor offering a “lower-cost alternative for internet debit payments” and “deprive American merchants and buyers of this innovative option to Visa and increase entry barriers for upcoming innovators.”
Plaid has noticed a massive uptick in demand throughout the pandemic, although the business enterprise was in an inexpensive position for a merger a year ago, Plaid decided to stay an independent organization in the wake of the lawsuit.
“While Plaid and Visa will have been an excellent mixture, we’ve decided to instead work with Visa as an investor as well as partner so we can totally give attention to building 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 monetary apps like Venmo, Square Cash along with Robinhood to associate users to their bank accounts. One key reason Visa was keen on purchasing Plaid was to access the app’s growing client base and sell them more services. Over the older year, Plaid says it has developed its client base to 4,000 companies, up 60 % from a season ago.