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 business enterprises will have prevailed in court, but complex and “protracted litigation will likely take sizable 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 and buyers of this innovative way to Visa and boost entry barriers for upcoming innovators.”
Plaid has seen a huge uptick in demand during the pandemic, and while the company was in a comfortable position for a merger a year ago, Plaid made a decision to remain an unbiased company in the wake of the lawsuit.
“While Visa and Plaid would have been an excellent combination, we have decided to instead work with Visa as an investor and partner so we are able to totally 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, Robinhood and Square Cash to connect users to their bank accounts. One major reason Visa was serious about purchasing Plaid was accessing the app’s growing customer base and advertise them more services. Over the older year, Plaid says it’s developed its customer base to 4,000 firms, up 60 % from a season ago.