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 businesses would have prevailed in court, but “protracted and complex 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 revolutionary way to Visa and increase entry barriers for future innovators.”
Plaid has observed a big uptick in need during the pandemic, and while the business was in an inexpensive position for a merger a season ago, Plaid chose to remain an independent company in the wake of the lawsuit.
“While Plaid and Visa will have been a great combination, we have decided to instead work with Visa as an investor and partner so we can fully concentrate on 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 financial apps as Venmo, Robinhood along with Square Cash to connect users to their bank accounts. One key reason Visa was interested in buying Plaid was to access the app’s growing client base and promote them more services. Over the past year, Plaid claims it’s grown its client base to 4,000 firms, up 60 % from a year ago.