Visa has abandoned its $5.3 billion bid to acquire fintech startup Plaid. In an announcement on Tuesday, the US Department of Justice said the two companies have agreed to call off their merger. The agency filed a lawsuit to block the deal last November, alleging at the time that, had it gone through, it would have allowed Visa to eliminate the startup as a “competitive threat to its online debit business before Plaid had a chance to succeed.”
In a press release confirming the news, Visa said it believes it could have won the case, which was slated to go to court in June. “We are confident we would have prevailed in court as Plaid’s capabilities are complementary to Visa’s, not competitive,” said Al Kelly, the CEO and chairman of Visa. “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.”
There are no two ways about it, the deal falling through is a blow for Visa. Even before the pandemic pushed more people to online shopping, Plaid was a lucrative acquisition target. When the deal was first announced, Visa said one in four Americans had used the company’s technology. Startups like Robinhood, Coinbase and Gemini depend on Plaid’s API to allow users to connect their bank accounts to their apps.