Visa and fintech company Plaid announced Tuesday that they have terminated their merger in exchange for the U.S. Department of Justice (DOJ) dismissing the antitrust lawsuit it filed against the two back in November.
On a conference call with investors Tuesday, Visa chairman and CEO Al Kelly said his company would continue to work with Plaid outside of a merger agreement. He added Visa will also seek partnerships with a “broad range” of fintech companies beyond Plaid. Plaid was one of five fintech companies Visa has announced plans to buy or partner with since 2019.
“We’re making a judgement that there’s plenty of opportunity in this very fast-moving space, and we’re just going to move on with life and take advantage of these other opportunities rather than get bogged down in a long, drawn-out process,” Kelly said on Tuesday’s call.
The dissolution of the proposed $5.3-billion transaction came just one day shy of the one-year anniversary of the giant bank’s announcement that it would acquire the San Francisco-based startup.
In March 2020, the National Retail Federation expressed concern that the merger was “a troubling attempt by Visa to impose a stranglehold” on online payments. The DOJ seemingly agreed, filing an antitrust lawsuit in November that said the merger would have reduced competition in online payments. The department’s complaint alleged that Visa viewed the merger as an “insurance policy” against Plaid’s plans to build a bank-linked payments network that could potentially compete with Visa and give consumers a way to pay merchants directly from their bank accounts rather than via debit card.
Plaid develops technology that allows consumers to connect their bank accounts to third-party apps and services, providing the framework for popular fintechs like Venmo, SoFi, and Betterment. With consumer permission, Plaid can also aggregate spending data, look up balances, and verify other personal financial data. Plaid connects to 200 million consumer bank accounts, with the DOJ calling Plaid “the leading financial data aggregation platform” in the U.S. Plaid CEO and co-founder Zach Perret said in a statement Tuesday that Plaid increased its customer base by more than 60% in 2020.