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 companies would have prevailed in court, but “protracted and complex litigation will likely take substantial time to fully 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 innovative alternative to Visa and increase entry barriers for future innovators.”
Plaid has seen a huge uptick in demand during the pandemic, and while the company was in a good position for a merger a year ago, Plaid decide to stay an independent company in the wake of the lawsuit.
“While Plaid and Visa would have been a great combination, we have decided to instead work with Visa as an investor and partner so we can fully focus on building the infrastructure to support fintech,” Plaid CEO Zach Perret said in a statement.
Plaid is a San Francisco fintech upstart used by popular financial apps like Venmo, Robinhood and Square Cash to connect users to their bank accounts. One key reason Visa was interested in buying Plaid was to access the app’s growing customer base and sell them more services. Over the past year, Plaid says it has grown its customer base to 4,000 companies, up 60% from a year ago.
This is a developing story.