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 “protracted and complex litigation will likely take sizable time to fully resolve.”
Antitrust regulators argued Visa’s acquisition of Plaid would eliminate a nascent competitor offering a “lower cost alternative for internet debit payments” and “deprive American merchants as well as customers of this innovative alternative to Visa and boost entry barriers for upcoming innovators.”
Plaid has seen a big uptick in need throughout the pandemic, and while the business enterprise was in a good position for a merger a year ago, Plaid made a decision to stay an impartial business in the wake of the lawsuit.
“While Plaid and Visa would have been a great combination, we have made a decision to instead work with Visa as an investor as well as partner so we are able to totally concentrate on establishing the infrastructure to support fintech,” Plaid CEO Zach Perret said in a statement.
Plaid is a San Francisco fintech upstart used by popular monetary apps as Venmo, Robinhood along with Square Cash to associate users to the bank accounts of theirs. One major reason Visa was serious about buying Plaid was to access the app’s growing customer base and promote them more services. Over the previous year, Plaid says it’s grown its customer base to 4,000 companies, up 60 % from a season ago.