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 believes the business enterprises will have prevailed in court, but “protracted and complex litigation will probably take sizable time to totally resolve.”
Antitrust regulators argued Visa’s acquisition of Plaid would eliminate a nascent competitor offering a “lower-cost option for online debit payments” and “deprive American merchants and customers of this innovative alternative to Visa and increase entry barriers for upcoming innovators.”
Plaid has seen a massive uptick in need during the pandemic, and while the business was in an inexpensive position for a merger a season ago, Plaid made a decision to remain an independent company in the wake of the lawsuit.
“While Plaid and Visa will have been an effective mixture, we’ve made a decision to instead work with Visa as an investor as well as partner so we are able to fully concentrate on creating the infrastructure to help fintech,” Plaid CEO Zach Perret said in a statement.
Plaid is a San Francisco fintech upstart used by popular financial apps like Venmo, Square Cash and Robinhood to associate users to their bank accounts. One major reason Visa was interested in purchasing Plaid was accessing the app’s growing customer base and sell them more services. Over the past year, Plaid claims it’s developed its customer base to 4,000 firms, up 60 % from a year ago.