Visa and Plaid Call Off Acquisition Plans
One of the biggest FinTech deals of the past year will no longer be going forward. This week, Visa and Plaid announced that they have mutually agreed to terminate their merger plans. Visa originally intended to pay $5.3 billion for Plaid in an acquisition that was first announced almost exactly one year ago.
The death of the Visa/Plaid deal comes after the purchase drew a lawsuit from regulators. In their suit, the Department of Justice accused Visa of attempting to monopolize online debit transactions. The text went on to state “By acquiring Plaid, Visa would eliminate a nascent competitive threat that would likely result in substantial savings and more innovative online debit services for merchants and consumers.” At the time that the suit was filed, Visa responded by saying that Plaid was not a payments company and did not pose a threat to their business — although the DOJ pointed to a 2019 quote attributed to a Visa exec that seemed to show the company did indeed view Plaid as a competitor of sorts.
Announcing the decision to call off the acquisition, Visa Inc Chairman and CEO Al Kelly stood firm on previous assertions, stating, “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.” Kelly continued, “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.”
Meanwhile, Plaid CEO and co-founder Zach Perret 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. 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.”
Although the Visa/Plaid merger is no more, another major FinTech deal seemingly continues toward a closing. Intuit’s $7.1 billion purchase of Credit Karma managed to cut regulatory muster, gaining DOJ approval in November. However, that approval came on the condition that Credit Karma offload its Credit Karma Tax platform, which Square has stepped up to buy when Intuit’s purchase is complete.
Ultimately, given the hurdles that the deal faced, it’s not surprising that Visa and Plaid preferred to throw in the towel. Luckily, the break-up seems unlikely to really harm either company as Plaid continues to grow and Visa remains as powerful as ever. That said, if there are any losers amid the deal’s demise, it would be Plaid’s investors who likely looked forward to a payday when the acquisition was completed. Of course, given Plaid’s prominence, it may not be long before another suitor turns up — and hopefully one that proves less problematic to regulators.