Visa and Plaid terminate $5.3bn merger

Visa and Plaid have today announced the termination of their merger agreement after the US Department of Justice filed a suit to block the partnership.

The department filed a civil antitrust lawsuit in November, alleging that Visa is a “monopolist in online debit” and that the partnership with the FinTech would have enabled the business to eliminate a competitive threat to its online debit business “before Plaid had a chance to succeed.”

Visa, which had revenues of around $23 billion in 2019, signed a $5.3 billion deal to buy the data sharing FinTech in January last year.

Last year Visa said the tie up provided the opportunity to deliver enhanced payment capabilities and related value-added services to FinTech developers.

Founded in 2013, Plaid provides connectivity to one in four people with a US bank account and enables them to share their financial data with more than 2,600 FinTech developers across 11,000 financial institutions.

The San Francisco-based company earned around $100 million in revenues the year before last.

Visa will continue to work with Plaid as an investor.

“We are confident we would have prevailed in court as Plaid’s capabilities are complementary to Visa’s, not competitive,” said Al Kelly, chairman and chief executive, Visa. “We believe the combination of Visa with Plaid would have delivered significant benefits, including greater innovation for developers, financial institutions and consumers.

“However, it has been a full year since we first announced our intent to acquire Plaid, and protracted and complex litigation will likely take substantial time to fully resolve.

Zach Perret, chief executive and co-founder of Plaid, said: “This past year saw an unprecedented uptick in demand for the services powered by Plaid, and our priority is to support the hundreds of millions of people who now rely on FinTech.

He added: “We made great strides last year, growing our customers by more than sixty percent and adding hundreds of banks to our platform. 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.”

Assistant attorney general Makan Delrahim, of the Justice Department’s Antitrust Division, described the termination as a victory for American consumers and small businesses.

“American consumers and business owners rely on the internet to buy and sell goods and services, and Visa – which has immense power in online debit in the United States– has extracted billions of dollars from those transactions,” he said. “Now that Visa has abandoned its anticompetitive merger, Plaid and other future FinTech innovators are free to develop potential alternatives to Visa’s online debit services. With more competition, consumers can expect lower prices and better services.”

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