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 would 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 choice for internet debit payments” and “deprive American merchants and buyers of this revolutionary alternative to Visa and improve entry barriers for future innovators.”
Plaid has observed a major uptick in need during the pandemic, and while the business was in an inexpensive position for a merger a season ago, Plaid made a decision to remain an independent business in the wake of the lawsuit.
“While Plaid and Visa will have been a great mixture, we’ve made a decision to instead work with Visa as an investor as well as partner so we can completely concentrate on building the infrastructure to support fintech,” Plaid CEO Zach Perret said in a statement.
Plaid is actually a San Francisco fintech upstart used by popular financial apps as Venmo, Square Cash along with Robinhood to associate users to the bank accounts of theirs. One key reason Visa was interested in purchasing Plaid was accessing the app’s growing subscriber base and advertise them more services. Over the previous year, Plaid claims it has grown its client base to 4,000 firms, up 60 % from a year ago.