Visa and 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 complex and “protracted litigation will likely take substantial time to totally 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 buyers of this innovative alternative to Visa and increase entry barriers for upcoming innovators.”
Plaid has noticed a huge uptick in need throughout the pandemic, and while the company was in an inexpensive position for a merger a season ago, Plaid chose to be an independent organization in the wake of the lawsuit.
“While Plaid and Visa would have been a good mixture, we have made the decision to instead work with Visa as an investor as well as partner so we can totally give attention to building the infrastructure to support fintech,” Plaid CEO Zach Perret said in a statement.
Plaid is actually a San Francisco fintech upstart used by popular financial apps as Venmo, Square Cash along with Robinhood to connect users to their bank accounts. One major reason Visa was keen on 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 companies, up 60 % from a year ago.