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 business enterprises will have prevailed in court, but complex and “protracted litigation will likely take substantial time to completely 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 revolutionary option to Visa and increase entry barriers for upcoming innovators.”
Plaid has observed a big uptick in demand throughout the pandemic, even though the company was in a comfortable position for a merger a year ago, Plaid decided to remain an impartial business in the wake of the lawsuit.
“While Visa and Plaid will have been an excellent combination, we have decided to instead work with Visa as an investor and partner so we are able to completely 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 well known monetary apps like Venmo, Square Cash and Robinhood to link users to the bank accounts of theirs. One key reason Visa was interested in purchasing Plaid was accessing the app’s growing client base and promote them more services. Over the older year, Plaid says it’s developed its customer base to 4,000 firms, up sixty % from a year ago.