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 businesses would have prevailed in court, but “protracted and complex litigation will probably take substantial time to fully resolve.”
Antitrust regulators argued Visa’s acquisition of Plaid would eliminate a nascent competitor offering a “lower-cost choice for online debit payments” and “deprive American merchants as well as consumers of this revolutionary way to Visa and improve entry barriers for upcoming innovators.”
Plaid has seen a major uptick in demand throughout the pandemic, although the business enterprise was in a comfortable 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 a great combination, we have made a decision to instead work with Visa as an investor as well as partner so we are able to fully concentrate on building the infrastructure to support fintech,” Plaid CEO Zach Perret said in a statement.
Plaid is a San Francisco fintech upstart used by popular monetary apps as Venmo, Robinhood and Square Cash to associate users to their bank accounts. One important reason Visa was interested in purchasing Plaid was to access the app’s growing subscriber base and promote them more services. Over the older year, Plaid states it’s developed its client base to 4,000 firms, up sixty % from a year ago.