Visa and 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 will 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 online debit payments” and “deprive American merchants and customers of this innovative way to Visa and improve entry barriers for upcoming innovators.”
Plaid has seen a massive uptick in demand during the pandemic, although the company was in a comfortable position for a merger a year ago, Plaid made a decision to stay an impartial 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 completely focus on creating the infrastructure to support 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 along with Robinhood to associate users to their bank accounts. One key reason Visa was interested in purchasing Plaid was to access the app’s growing subscriber base and advertise them more services. Over the past year, Plaid states it’s grown its customer base to 4,000 companies, up 60 % from a year ago.