Need to Know
- Almost exactly one year after signing a multi-billion dollar acquisition deal, Visa and Plaid have terminated their agreement.
- Despite disappointment about the deal, Plaid is focusing on expanding its offerings into Europe and its open banking capabilities.
- In 2021, Plaid is set to focus on digital payments, consumer protections, and e-commerce refunds.
Just one year after signing a $5.3 billion acquisition deal, Visa and Plaid have called off the agreement.
In January of 2020, Visa signed a deal to acquire financial data network Plaid. The deal was designed to help Plaid scale and grow with a massive brand backing them, while Visa could expand its offerings and provide more value for its community of developers, financial institutions, and consumers.
However, in November, the US Department of Justice blocked the acquisition, arguing that the deal could result in “a nascent competitive threat that would likely result in substantial savings and more innovative online debit services for merchants and consumers.”
Visa frowned upon the termination of the deal, and Plaid CEO Zach Perret said in a blog post on Plaid’s website, “Unfortunately, the pace of a multi-year regulatory review is not compatible with the fast-moving realities of a startup – and delaying close to another year or more is not in the best interest of our customers, the financial system, or consumers themselves.”
That said, Plaid is seemingly taking a more optimistic approach to what comes next.
Said Keith Grose, Plaid’s head of Europe, “Plaid is excited for the future. It has been a crazy year with Covid-19 and there has been a huge acceleration in fintech, the needs of people and consumers changed a lot when everyone was forced to work from home – our customer base grew 60%.”
Grose says the fintech is focusing on expanding its open banking capabilities in 2021. Plaid will work on “building out new functionalities for payment initiation, building in more features and services for bank-to-bank payments, and expanding its UK and European customer base.”
Grose also looks forward to “the potential for building functionality around consumer protections and refunds in the e-commerce world and this is where partnering with big payments providers is attractive.”
“…There is plenty of exciting development, both in terms of the regulation and, government mandated features, as well as features that the market are going to bring to bear,” said Grose.
Added Perret, “In addition to our ongoing focus on helping companies of all sizes deliver digital financial products, we have made significant progress in the ways that we work with financial institutions. Delivering on the promise of open finance is in everyone’s best interest, and we’ll be working in lockstep with our customers and financial institutions to bring this to fruition globally.”