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 businesses will have prevailed in court, but “protracted and complex litigation will likely take sizable time to totally 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 as well as customers of this revolutionary alternative to Visa and boost entry barriers for future innovators.”
Plaid has seen a tremendous uptick in need during the pandemic, although the company was in a good position for a merger a season ago, Plaid decided to remain an unbiased company in the wake of the lawsuit.
“While Plaid and Visa would have been an excellent mixture, we’ve decided to instead work with Visa as an investor as well as partner so we can fully give attention to building the infrastructure to help fintech,” Plaid CEO Zach Perret said in a statement.
Plaid is actually a San Francisco fintech upstart used by well known monetary apps like Venmo, Square Cash along with Robinhood to connect users to the bank accounts of theirs. One major reason Visa was interested in buying Plaid was accessing the app’s growing customer base and promote them more services. Over the past year, Plaid states it’s developed its customer base to 4,000 companies, up 60 % from a season ago.