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 will have prevailed in court, but “protracted and complex 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 alternative for online debit payments” and “deprive American merchants as well as customers of this innovative alternative to Visa and increase entry barriers for upcoming innovators.”
Plaid has observed a tremendous uptick in demand throughout the pandemic, even though the company was in a comfortable position for a merger a season ago, Plaid made a decision to be an impartial business in the wake of the lawsuit.
“While Visa and Plaid would have been a good mixture, we have made the decision to instead work with Visa as an investor and partner so we are able to totally give attention to building the infrastructure to help fintech,” Plaid CEO Zach Perret said in a statement.
Plaid is a San Francisco fintech upstart used by popular financial apps like Venmo, Robinhood along with Square Cash to associate users to their bank accounts. One important reason Visa was serious about buying Plaid was to access the app’s growing customer 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 season ago.