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 companies will have prevailed in court, but “protracted and complex litigation will probably take substantial time to completely 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 consumers of this innovative alternative to Visa and improve entry barriers for upcoming innovators.”
Plaid has observed a tremendous uptick in demand throughout the pandemic, although the business was in a comfortable position for a merger a year ago, Plaid chose to remain an unbiased business in the wake of the lawsuit.
“While Visa and Plaid will have been a good mixture, we have made the decision to instead work with Visa as an investor and partner so we can completely concentrate on building 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, Robinhood and Square Cash to associate users to their bank accounts. One important reason Visa was serious about buying Plaid was accessing the app’s growing subscriber base and sell them more services. Over the previous year, Plaid states it has grown its customer base to 4,000 companies, up sixty % from a season ago.