Plaid acquired by Visa, partners with Bankable

Visa offers top dollar for Plaid, marking the increasing importance of data access

In January, Visa announced the purchase of financial services API start-up Plaid, signing a $5.3 billion deal, subject to regulatory approval the deal will close in three to six months. Plaid has been hot in the market – with Visa reportedly beating Mastercard in a bid battle. A few days after the Visa deal was announced, UK-based Banking-as-a-Software platform Bankable revealed that it had signed a mutually beneficial agreement with the start-up.

Visa is funding the transaction from cash on hand and debt issuance at the appropriate time. The deal will not impact the global payments giant’s previously announced stock buyback program or dividend policy. Commenting on the acquisition, Al Kelly, CEO and chairman of Visa, said: “Plaid is a leader in the fast-growing FinTech world with best-in-class capabilities and talent. The acquisition, combined with our many FinTech efforts already underway, will position Visa to deliver even more value for developers, financial institutions and consumers.” He also noted that the acquisition was a natural evolution of Visa’s 60-year journey from safely and securely connecting buyers and sellers to connecting consumers with digital financial services.

Zach Perret, Founder and CEO of Plaid, said: “Joining forces with Visa, a brand that is trusted by billions of consumers, and financial institutions in over 200 countries and territories, represents an incredible opportunity to continue to scale our products. We’ll be able to lean on their brand, resources, and international footprint to benefit our customers, our partners, and the markets we serve.

“We were very impressed by the Visa team from the minute they approached us. They share our vision for the future of financial services and have deep respect for the developer community we support. They want us to operate as an independent business unit so we can keep doing what we do best.”

Plaid’s technology platform enables applications to connect with users’ bank accounts and focuses on enabling consumers and businesses to interact with their bank accounts, check balances, and make payments through financial technology applications. Its open APIs help developers share banking and other financial information with thousands of apps and services such as Acorns, Betterment, Chime, Transferwise and Venmo.

According to reports, investors in Plaid are exiting with massive returns. So far, Plaid has raised $310 million, backed by companies such as Spark Capital, Google Ventures, New Enterprise Associates, Goldman Sachs, American Express, and Citibank. In its Series C round, which closed in December 2018, it raised $250 million, at a $2.65 billion valuation.

Suresh Vaghjiani, CEO and Co-Founder of Tribe Payments, has followed the story, and commented that Visa’s purchase shows that established financial organisations have recognised that the API-driven financial data sharing space has been underserved. “The valuation certainly comes as no surprise – there is a huge market demand for standardisation in the FinTech space and Plaid is one of the leaders.

However, facilitating the transfer of customer data is a sensitive issue for banks and FinTech given the level of access and data governance threat involved. With Visa’s backing and credentials, Plaid is much more likely to get traction with institutions that may have previously seen them as a risk,” he said. “From a VISA perspective, this can be seen as defensive play where the company diversifies and strengthens its offering as FinTechs move away from cards-led payment networks,” Vaghjiani added.

Just days after the acquisition, Bankable announced a strategic partnership with Plaid. Bankable customers will be able to use Plaid’s technology to connect with their users’ bank accounts worldwide, while Plaid gets access to Bankable’s cloud-based banking and payments platform. Plaid’s API technology is being leveraged to enable quick time to market for Bankable clients, and it provides connectivity to 15,000 banks in the US and Europe.

Eric Mouilleron, CEO and Founder of Bankable, said: “Like Bankable, Plaid is a FinTech enabler providing infrastructure as a service to power various business cases in lending, personal business finance, consumer payments. Plaid and Bankable are both focused, since inception, on democratising financial services through technology.” Vaghjiani noted: “By allowing multiple systems around the world to communicate and operate together via a single data platform, Plaid is standardising and bridging the gap between the old transaction-led world, and the new data-led world.”

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