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 believes the companies will 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 customers of this revolutionary option to Visa and improve entry barriers for future innovators.”
Plaid has seen a massive uptick in need throughout the pandemic, even though the company was in a good position for a merger a season ago, Plaid decided to be an independent business in the wake of the lawsuit.
“While Visa and Plaid will have been an excellent combination, we’ve made the decision to instead work with Visa as an investor as well as partner so we can completely 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 like Venmo, Square Cash and Robinhood to link users to the bank accounts of theirs. One important reason Visa was interested in purchasing Plaid was accessing the app’s growing subscriber base and promote them more services. Over the older year, Plaid states it’s grown its client base to 4,000 firms, up sixty % from a year ago.