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 “protracted and complex litigation will probably take sizable time to totally resolve.”
Antitrust regulators argued Visa’s acquisition of Plaid would eliminate a nascent competitor offering a “lower-cost option for internet debit payments” and “deprive American merchants as well as customers of this innovative option to Visa and increase entry barriers for upcoming innovators.”
Plaid has observed a major uptick in demand during the pandemic, although the business enterprise was in a good position for a merger a year ago, Plaid made a decision to remain an independent organization in the wake of the lawsuit.
“While Visa and Plaid will have been an effective combination, we’ve made a decision to instead work with Visa as an investor and partner so we can completely concentrate on creating the infrastructure to support fintech,” Plaid CEO Zach Perret said in a statement.
Plaid is actually a San Francisco fintech upstart used by popular monetary apps as Venmo, Square Cash and Robinhood to link users to the bank accounts of theirs. One important reason Visa was interested in buying Plaid was accessing the app’s growing subscriber base and promote them more services. Over the past year, Plaid states it has developed its customer base to 4,000 firms, up sixty % from a year ago.