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 believes the business enterprises will have prevailed in court, but “protracted and complex litigation will probably take sizable 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 as well as customers of this revolutionary option to Visa and boost entry barriers for future innovators.”
Plaid has noticed a massive uptick in need during the pandemic, although the company was in a good position for a merger a season ago, Plaid made a decision to stay an independent company in the wake of the lawsuit.
“While Visa and Plaid will have been an excellent combination, we’ve made the decision to instead work with Visa as an investor and partner so we are able to completely concentrate on creating the infrastructure to help 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 along with Square Cash to link users to the bank accounts of theirs. One key reason Visa was serious about purchasing Plaid was accessing the app’s growing subscriber base and advertise them more services. Over the previous year, Plaid says it has developed its client base to 4,000 firms, up sixty % from a season ago.