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 would 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 option for internet debit payments” and “deprive American merchants as well as consumers of this innovative option to Visa and increase entry barriers for future innovators.”
Plaid has seen a massive uptick in demand throughout the pandemic, and while the business was in a good position for a merger a season ago, Plaid made a decision to remain an unbiased company in the wake of the lawsuit.
“While Visa and Plaid will have been a great combination, we’ve decided to instead work with Visa as an investor and partner so we are able to 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 popular monetary apps as Venmo, Robinhood along with Square Cash to connect users to the bank accounts of theirs. One important reason Visa was interested in buying Plaid was to access the app’s growing client base and sell them more services. Over the past year, Plaid states it has grown its customer base to 4,000 companies, up sixty % from a year ago.