Department of Justice Stops Visa’s Deal with Startup

Visa’s plans to acquire Plaid, a US-based financial technology startup, have fallen through after the Department of Justice (DoJ) objected to the deal. In January 2020, Visa publicized its Plaid acquisition deal, which was worth $5.3 billion. When the deal was announced, Visa said that it would greatly influence its own business direction for the next 10 years. However, the US DoJ interfered and filed an antitrust claim that led to the deal’s cancellation. The department stated that if Visa had successfully acquired Plaid, its control over the online payment industry would further expand. The DoJ filed the claim on November 5, 2020. The claim stated that Visa is monopolizing the online payment industry and is charging billions of dollars in fees annually to process online payment transactions. Makan Delrahim, Assistant Attorney General in the DoJ’s Antitrust Division, called the successful court action a victory for American consumers and small businesses. He said that the deal’s termination gives Plaid and other companies the freedom to develop alternative online payment services. Delrahim added that this is beneficial to consumers because when there are more alternatives in the market, companies can be expected to offer better services and lower prices. After the deal’s cancellation, Visa CEO Al Kelly said through a press release that the company believes the acquisition of Plaid would have resulted in significant benefits for both consumers and financial institutions. He added that despite retracting the acquisition deal, Visa still greatly respects Plaid and will continue to partner with the startup to provide a better experience for their users.