Paul Harris discusses Visa
Visa Inc. agreed to walk away from its proposed US$5.3 billion acquisition of Plaid Inc. following a U.S. Justice Department lawsuit to stop the deal on antitrust grounds.
The department sued to block the Plaid deal in November, accusing Visa of trying to buy the financial-technology firm to eliminate an emerging threat to its online debit business. Visa has said the deal would expand its services and in a filing last month said the government failed to provide “a shred of detail” about how Plaid’s products would ultimately compete with the payments behemoth.
“We are confident we would have prevailed in court as Plaid’s capabilities are complementary to Visa’s, not competitive,” Visa Chief Executive Officer Al Kelly said in a statement Tuesday. “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.”
The Justice Department on Tuesday called the companies’ decision “a victory for American consumers and small businesses.” With trial scheduled for June, President-elect Joe Biden’s Justice Department would have been responsible for prosecuting the case.
“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,” the Justice Department said in a separate statement. “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.”
Banks and startups use the technology Plaid built to access consumer financial data. In the year since Visa announced the deal, hundreds of banks have joined Plaid’s platform, Zach Perret, CEO and co-founder of Plaid, said in a separate blog post.
--With assistance from David McLaughlin.