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 thinks 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 option for online debit payments” and “deprive American merchants and consumers of this innovative option to Visa and improve entry barriers for future innovators.”
Plaid has observed a big uptick in demand during the pandemic, and while the business was in an inexpensive position for a merger a season ago, Plaid decided to stay an unbiased organization in the wake of the lawsuit.
“While Visa and Plaid will have been an excellent mixture, we’ve made the decision 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 popular monetary apps like Venmo, Square Cash and Robinhood to associate users to their bank accounts. One key reason Visa was serious about buying Plaid was to access the app’s growing subscriber base and advertise them more services. Over the past year, Plaid says it’s grown its client base to 4,000 firms, up sixty % from a year ago.