Visa’s acquisition of a U.S. fintech startup has been halted by the country’s regulators. The consumer credit giant was set to acquire Plaid for $5.3 billion, but antitrust claims from the Department of Justice have brought the deal to an end.
As it was reported, Visa announced the acquisition exactly a year ago. In its announcement, the California-based giant claimed that the acquisition would shape its business for the next decade. However, the DoJ intervened and filed an antitrust claim blocking the acquisition. The department claimed that the acquisition would see Visa extend its existing monopoly in the payments industry.
In an announcement, the DoJ revealed that its court actions had successfully halted the acquisition. Makan Delrahim, the Assistant Attorney General in the DoJ’s Antitrust Division touted it as a victory for Americans. He remarked:
“In a victory for American consumers and small businesses, Visa has abandoned its efforts to acquire an innovative and nascent competitor. […] 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.”
The DoJ filed its antitrust claim in court in November. The Northern District of California had scheduled the trial for June 28, 2021. However, following the decision to terminate the acquisition, the DoJ has filed a Joint Stipulation of Dismissal.
While Visa backed down from the legal battle, it believes it could have won the case had it proceeded. In its press release, the firm’s CEO Al Kelly stated:
“We are confident we would have prevailed in court as Plaid’s capabilities are complementary to Visa’s, not competitive. 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.”
Visa will continue to partner with Plaid to give both their users a better experience, Kelly said.
For its part, Plaid revealed that in the one year since announcing the acquisition, it had recorded great growth. Speaking to TechCrunch, the company revealed that it saw a 60% customer growth in 2020. It now serves more than 4,000 fintech companies.
Plaid was founded in 2013 and since then, has grown aggressively to now cover 11,000+ financial institutions. Some of its clients include Venmo, investment platform Betterment, American Express, SoFi and TransferWise. In addition, it has been serving a growing number of digital currency companies including Gemini, Coinbase and digital currency wallet Abra.