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 companies will have prevailed in court, but complex and “protracted litigation will probably take substantial 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 customers of this innovative option to Visa and improve entry barriers for upcoming innovators.”
Plaid has noticed a huge uptick in need during the pandemic, even though the business enterprise was in a comfortable position for a merger a season ago, Plaid decided to remain an independent organization in the wake of the lawsuit.
“While Plaid and Visa will have been an effective combination, we have made the decision to instead work with Visa as an investor as well as partner so we can completely focus 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 monetary apps like Venmo, Square Cash and Robinhood to link users to their bank accounts. One major reason Visa was interested in purchasing Plaid was to access the app’s growing subscriber base and sell them more services. Over the past year, Plaid states it has grown its customer base to 4,000 firms, up sixty % from a year ago.