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 would have prevailed in court, but “protracted and complex litigation will probably take substantial time to totally resolve.”
Antitrust regulators argued Visa’s acquisition of Plaid would eliminate a nascent competitor offering a “lower cost choice for internet debit payments” and “deprive American merchants and customers of this innovative way to Visa and boost entry barriers for future innovators.”
Plaid has seen a huge uptick in need throughout the pandemic, although the business was in a comfortable position for a merger a year ago, Plaid made a decision to remain an unbiased organization in the wake of the lawsuit.
“While Visa and Plaid will have been an excellent mixture, we’ve made the decision to instead work with Visa as an investor as well as partner so we can fully give attention to 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 as Venmo, Square Cash and Robinhood to associate users to the bank accounts of theirs. One important reason Visa was serious about purchasing Plaid was to access the app’s growing customer base and promote them more services. Over the past year, Plaid states it has developed its customer base to 4,000 companies, up 60 % from a season ago.