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 companies would have prevailed in court, but “protracted and complex litigation will probably take substantial time to completely 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 buyers of this innovative way to Visa and improve entry barriers for future innovators.”
Plaid has noticed a major uptick in need during the pandemic, and while the company was in a good position for a merger a year ago, Plaid decided to stay an unbiased business in the wake of the lawsuit.
“While Plaid and Visa would have been an excellent mixture, we’ve made the decision to instead work with Visa as an investor and partner so we are able to totally focus on establishing the infrastructure to support fintech,” Plaid CEO Zach Perret said in a statement.
Plaid is actually a San Francisco fintech upstart used by popular financial apps like Venmo, Square Cash along with Robinhood to connect users to their bank accounts. One important reason Visa was serious about buying Plaid was accessing the app’s growing client base and advertise them more services. Over the past year, Plaid states it has grown its client base to 4,000 companies, up sixty % from a year ago.