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 complex and “protracted 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 choice for internet debit payments” and “deprive American merchants and consumers of this revolutionary option to Visa and increase entry barriers for future innovators.”
Plaid has observed a major uptick in demand throughout the pandemic, even though the business enterprise was in a good position for a merger a season ago, Plaid chose to be an unbiased company in the wake of the lawsuit.
“While Plaid and Visa would have been a good mixture, we’ve made the decision to instead work with Visa as an investor and partner so we can fully give attention to building the infrastructure to help fintech,” Plaid CEO Zach Perret said in a statement.
Plaid is a San Francisco fintech upstart used by well known monetary apps like Venmo, Robinhood and Square Cash to connect users to the bank accounts of theirs. One key reason Visa was keen on purchasing Plaid was to access the app’s growing customer base and sell them more services. Over the older year, Plaid claims it has grown its customer base to 4,000 firms, up sixty % from a year ago.