Visa and Plaid announces termination of merger agreement
By Pavithra R
Visa and Plaid have announced the termination of their merger agreement and agreed with the Department of Justice to dismiss the litigation related to the proposed transaction.
The acquisition was first proposed on January 13, 2020, and was expected to close within three to six months. However, due to complex litigations, the companies have mutually decided to terminate the pending transaction and Plaid will remain an independent company.
“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. 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,” said Al Kelly, Chairman and CEO of Visa Inc.
“We are focused on accelerating our business by advancing our broader strategy and continuing to drive Visa’s three growth pillars: consumer payments, new flows, and value-added services. We have great momentum to build upon. Over the past year, our Visa Direct solution moved money around the world using multiple card, ACH and RTP networks, growing nearly 70 percent. In addition, our value-added services revenue has grown in the mid-to-high-teens. We have great respect for Plaid and the business they have built and look forward to our continued partnership,” added Mr Kelly.
Founded in 2012, Plaid focusses on building the enabling infrastructure for financial services that provide a secure and efficient way to move financial data, reducing fraud and providing more product and service options to consumers that can improve their transparency and control over personal financial information. The firm has been maniacally focused on expanding access and improving financial outcomes for consumers, developers, and financial institutions. The joining with Visa was expected to accelerate this work.
Both Visa and Plaid realised that the pace of a multi-year regulatory review was not compatible with the fast-moving realities of a startup and hence decided to terminate the agreement. Plaid will continue to work with Visa as an investor and partner.
“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,” said Zach Perret, CEO and co-founder of Plaid.
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