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 likely take sizable time to completely 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 customers of this innovative way to Visa and boost entry barriers for upcoming innovators.”
Plaid has observed a massive uptick in need during the pandemic, although the business enterprise was in a comfortable position for a merger a year ago, Plaid chose to be an independent company in the wake of the lawsuit.
“While Plaid and Visa would have been a great combination, we’ve decided to instead work with Visa as an investor as well as partner so we can totally focus on establishing 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, Robinhood and Square Cash to link users to their bank accounts. One major reason Visa was keen on buying Plaid was to access the app’s growing customer base and promote them more services. Over the previous year, Plaid claims it’s developed its customer base to 4,000 companies, up sixty % from a year ago.