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 thinks the businesses will have prevailed in court, but complex and “protracted litigation will likely take substantial time to fully 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 and consumers of this innovative alternative to Visa and improve entry barriers for upcoming innovators.”
Plaid has observed a big uptick in demand during the pandemic, and while the company was in an inexpensive position for a merger a year ago, Plaid decided to stay an impartial company in the wake of the lawsuit.
“While Plaid and Visa will have been an effective mixture, we have made the decision to instead work with Visa as an investor as well as partner so we can fully give attention to creating 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 as Venmo, Square Cash along with Robinhood to connect users to their bank accounts. One major reason Visa was interested in purchasing Plaid was accessing the app’s growing customer base and sell them more services. Over the past year, Plaid claims it’s developed its customer base to 4,000 companies, up 60 % from a year ago.