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 complex and “protracted litigation will likely take substantial time to fully resolve.”
Antitrust regulators argued Visa’s acquisition of Plaid would eliminate a nascent competitor offering a “lower cost alternative for online debit payments” and “deprive American merchants and buyers of this revolutionary alternative to Visa and increase entry barriers for upcoming innovators.”
Plaid has noticed a major uptick in need throughout the pandemic, and while the business enterprise was in a comfortable position for a merger a season ago, Plaid decided to be an impartial organization in the wake of the lawsuit.
“While Plaid and Visa will have been a great mixture, we’ve made the decision to instead work with Visa as an investor as well as partner so we are able to fully focus on building the infrastructure to support fintech,” Plaid CEO Zach Perret said in a statement.
Plaid is a San Francisco fintech upstart used by well known monetary apps like Venmo, Square Cash along with Robinhood to link users to their bank accounts. One key reason Visa was keen on purchasing Plaid was to access the app’s growing customer base and promote them more services. Over the previous year, Plaid states it’s developed its client base to 4,000 firms, up 60 % from a year ago.