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Thursday 14 January 2021

Visa's $5bn Plaid deal comes unstitiched

PlaidUS payments giant, Visa, has dropped plans to acquire innovative fintech, Plaid, following a move by the US Department of Justice block the proposed $5bn transaction (see: Visa earns its open banking stripes). Explaining its decision, the regulator highlighted suspicions that Visa was motivated to pursue the deal due to concerns about the damaging impact on its own business prospects if Plaid were to be acquired by a competitor.

Visa has denied that its planned deal would reduce competition in the marketplace and highlighted that Plaid’s capabilities are largely complementary to its own. The company also stated that it believed it would have prevailed in court but indicated that it was not keen to get dragged into a lengthy legal battle in an effort to push through the deal.

Founded in 2013, Plaid is specialist provider of API-enabled data aggregation services. The company works with financial companies and third-party service providers, keen to capitalise on the burgeoning API economy. The decision by the regulator is a blow to Visa as the Plaid deal would have embedded Visa at the heart of the fintech ecosystem. The newly acquired client base could have provided valuable first-hand insight into the network of emerging service providers.

Visa’s assertion that Plaid’s proposition is complementary to its own clearly has merit. However, it is also apparent that the network of third-party service providers that Plaid enables, and the rich data flows it has access to, could potentially have a significant impact on competition in Visa’s core market. With this in mind, it will be interesting to see if another major player emerges to make a move for Plaid following the regulator's judgement.

Posted by: Jon C Davies

Tags: M&A   OpenBanking   Plaid   Visa  

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