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 business enterprises would have prevailed in court, but “protracted and complex litigation will probably take sizable time to completely resolve.”
Antitrust regulators argued Visa’s acquisition of Plaid would eliminate a nascent competitor offering a “lower cost option for online debit payments” and “deprive American merchants and consumers of this innovative way to Visa and increase entry barriers for upcoming innovators.”
Plaid has seen a massive uptick in demand throughout the pandemic, even though the business enterprise was in a good position for a merger a year ago, Plaid decided to remain an impartial business in the wake of the lawsuit.
“While Visa and Plaid would have been an effective mixture, we’ve made a decision to instead work with Visa as an investor as well as partner so we can fully 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 well known monetary apps as Venmo, Robinhood and Square Cash to associate users to their bank accounts. One key reason Visa was interested in purchasing Plaid was to access the app’s growing subscriber base and sell them more services. Over the previous year, Plaid states it’s grown its client base to 4,000 companies, up sixty % from a year ago.