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 companies would have prevailed in court, but “protracted and complex litigation will likely take sizable time to fully 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 and buyers of this innovative way to Visa and improve entry barriers for future innovators.”
Plaid has noticed a big uptick in demand during the pandemic, although the company 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 Plaid and Visa will have been a good mixture, we’ve made a decision to instead work with Visa as an investor as well as partner so we can 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 like Venmo, Robinhood and Square Cash to link users to the bank accounts of theirs. One important reason Visa was keen on purchasing Plaid was accessing the app’s growing subscriber base and advertise them more services. Over the previous year, Plaid claims it has grown its customer base to 4,000 companies, up 60 % from a year ago.