Payment system Visa Inc (V) has abandoned its plans to acquire fintech start-up Plaid. According to a Wall Street Journal report, this was influenced by the U.S. Department of Justice’s antitrust lawsuit that contested the proposed deal.
In January last year, Visa announced its intention to buy Plaid, which for the price of $5.3 billion. The companies were then expected to close the deal three to six months after the announcement. According to an article in the Wall Street Journal, the acquisition will allow a broader range of payment options and go beyond Visa cards.
However, the U.S. Department of Justice filed a lawsuit last November seeking to halt the deal. The lawsuit claimed that the purchase of Plaid would eliminate competition from companies entering the online debit card business and would maintain the payments giant’s monopoly on the market. According to the Ministry of Justice, this will lead to a rise in prices, a decrease in innovative developments, and an increase in the market entry barrier for online debit services.
“Plaid and any other emerging fintech innovators can develop potential ways to compete with Visa online debit services. With additional competition, consumers can anticipate reduced prices and better services,” Makan Delrahim, Chief of the Antimonopoly Department of the Ministry of Justice, stated.
At first, Visa Inc (V) management wanted to contest the claim as they believed they would win. The trial was scheduled to take place in June 2021. Later, the deal was terminated by the company, stating it would require too much time. The WSJ quoted Visa Inc (V) CEO Al Kelly as saying that, “it has been a full year since we announced our intentions to acquire Plaid, and litigation is likely to take a considerable amount of time to resolve fully.”