In a blow to a significant Fintech, the US Department of Justice has filed suit in federal court pertaining to Visa’s (NYSE:V) pending $5.3 billion acquisition of Plaid, a top open banking platform.
Last January, Visa announced its intent to purchase Plaid. At that time, Al Kelly, CEO and chairman of Visa, stated:
“We are extremely excited about our acquisition of Plaid and how it enhances the growth trajectory of our business. 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.”
In a statement, Visa refuted the suit:
“Visa strongly disagrees with the Department of Justice (DOJ), whose attempt to block Visa’s acquisition of Plaid is legally flawed and contradicted by the facts. This action reflects a lack of understanding of Plaid’s business and the highly competitive payments landscape in which Visa operates. The combination of Visa and Plaid will deliver substantial benefits for consumers seeking access to a broader range of financial-related services, and Visa intends to defend the transaction vigorously.
As we explained to the DOJ, Plaid is not a payments company. Visa’s business faces intense competition from a variety of players – but Plaid is not one of them. Plaid is a data network that enables individuals to connect their financial accounts to the apps and services they use to manage their financial lives, and its capabilities complement Visa’s. Together, Visa and Plaid will deliver better digital experiences and more choice for consumers in managing their money and financial data. Visa is confident that this transaction is good for consumers and good for competition.”
In purchasing Plaid, Visa messaged its push for digital dominance in a landscape increasingly dependant on Fintech. The acquisition was called a “natural evolution” as it connects consumers with digital financial services. Kelly said the combination of the two firms “will put us at the epicenter of the Fintech world, expanding our total addressable market and accelerating our long-term revenue growth trajectory.”
Now the acquisition appears to be tangled up in a extended legal battle.