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 “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 alternative for online debit payments” and “deprive American merchants and buyers of this revolutionary alternative to Visa and improve entry barriers for future innovators.”
Plaid has noticed a major uptick in demand during the pandemic, and while the company was in a good position for a merger a season ago, Plaid chose to stay an unbiased business in the wake of the lawsuit.
“While Visa and Plaid would have been an effective combination, we have made a decision to instead work with Visa as an investor and partner so we are able to totally give attention to establishing the infrastructure to help fintech,” Plaid CEO Zach Perret said in a statement.
Plaid is a San Francisco fintech upstart used by popular monetary apps as Venmo, Square Cash and Robinhood to associate users to the bank accounts of theirs. One major reason Visa was serious about purchasing Plaid was to access the app’s growing client base and sell them more services. Over the past year, Plaid states it’s grown its customer base to 4,000 firms, up 60 % from a season ago.