Visa Drops Plans In order to Acquire Fintech Startup Plaid After DOJ Antitrust Lawsuit

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.

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Visa CEO Al Kelly said in a statement he believes the businesses would have prevailed in court, but complex and “protracted 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 option for online debit payments” and “deprive American merchants and customers of this revolutionary option to Visa and improve entry barriers for upcoming innovators.”

Plaid has observed a massive uptick in demand during the pandemic, and while the company was in an inexpensive position for a merger a year ago, Plaid made a decision to be an independent organization in the wake of the lawsuit.

“While Plaid and Visa will have been a great combination, we have made a decision to instead work with Visa as an investor as well as partner so we can fully concentrate on building 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, Square Cash along with Robinhood to link users to the bank accounts of theirs. One major reason Visa was interested in buying Plaid was accessing the app’s growing subscriber base and promote them more services. Over the previous year, Plaid says it’s developed its customer base to 4,000 companies, up 60 % from a year ago.

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