The Strategist

Visa drops purchase of Plaid due to US Justice Department claims

01/14/2021 - 02:35

Visa and fintech startup Plaid have issued a joint statement saying that the companies refuse to merge. The decision was prompted by complaints from the US Department of Justice, which believed the deal would harm free competition in the market.

Håkan Dahlström
Håkan Dahlström
Visa announced the purchase of Plaid in January 2020. The deal was valued at $5.3bn. The startup produces software that allows users to "securely link their bank accounts with mobile apps" that help manage their finances.

However, in November last year, the US Department of Justice filed a lawsuit in federal court in the Northern District of California demanding that the deal be halted. 

According to the authorities, by buying Plaid, Visa was trying to eliminate a competitor in the market of electronic payments. Visa used its own words as an argument, estimating a potential loss of $500 million by 2024 if Plaid is bought by a competitor.

In the end, failing to get regulatory approval within a year of announcing the deal, Visa decided to abandon the purchase. Instead, Plaid will become an investor in Visa and continue to work with the payment giant as a partner.


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