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 business enterprises will have prevailed in court, but “protracted and complex litigation will probably take sizable time to totally resolve.”
Antitrust regulators argued Visa’s acquisition of Plaid would eliminate a nascent competitor offering a “lower cost choice for online debit payments” and “deprive American merchants as well as consumers of this revolutionary alternative to Visa and improve entry barriers for future innovators.”
Plaid has seen a big uptick in demand throughout the pandemic, even though the company was in an inexpensive position for a merger a year ago, Plaid chose to remain an unbiased organization in the wake of the lawsuit.
“While Plaid and Visa would have been a good combination, we have decided to instead work with Visa as an investor as well as partner so we can fully give attention to creating 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 as Venmo, Robinhood and Square Cash to associate users to their bank accounts. One major reason Visa was interested in purchasing Plaid was accessing the app’s growing client base and sell them more services. Over the previous year, Plaid claims it has grown its client base to 4,000 companies, up 60 % from a season ago.