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 business enterprises will have prevailed in court, but complex and “protracted litigation will likely take substantial 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 consumers of this revolutionary way to Visa and increase entry barriers for future innovators.”
Plaid has seen a huge uptick in demand during the pandemic, and while the business enterprise was in an inexpensive position for a merger a year ago, Plaid decided to remain an impartial company in the wake of the lawsuit.
“While Plaid and Visa would have been an excellent mixture, we’ve made a decision to instead work with Visa as an investor and partner so we are able to totally concentrate on building the infrastructure to help fintech,” Plaid CEO Zach Perret said in a statement.
Plaid is a San Francisco fintech upstart used by popular financial apps as Venmo, Robinhood and Square Cash to link users to their bank accounts. One major reason Visa was interested in purchasing Plaid was to access the app’s growing client base and sell them more services. Over the older year, Plaid says it’s grown its client base to 4,000 firms, up sixty % from a year ago.