DOJ Clears Mastercard’s Finicity Buy
Ajay Banga, CEO, Mastercard. Photo credit: World Economic Forum, licensed under CC BY-NC-SA 2.0 Payments giant Mastercard has said that the US…
|Ajay Banga, CEO, Mastercard.
Photo credit: World Economic Forum, licensed under CC BY-NC-SA 2.0
Payments giant Mastercard has said that the US Department of Justice (DOJ) has cleared its recently proposed acquisition of Finicity, a Utah-based financial data aggregation company, after a review that took note of antitrust concerns. The DOJ’s go-ahead for the acquisition is notable given that the agency is, on the other hand, suing to block a similar acquisition made by Mastercard’s major rival, Visa, whereas it agreed to pay $5.3 billion to acquire Plaid, which offers a similar service to Finicity.
In June this year, Mastercard reached a definitive agreement to acquire Finicity for $825 million upfront plus another $160 million in conditional payments. The deal gives Mastercard control of a financial data aggregation network that offers real-time access to the financial data and insights of customers to other fintech companies.
Mastercard’s deal marked a good win for Finicity, which is backed by $80 million in outside funding from investors including Experian, the well-known consumer credit reporting company.
The DOJ is fighting a similar acquisition to that of Mastercard’s and more so one made by the payments company’s major rival, Visa. The agency recently sued to block Visa’s proposed $5.3 billion acquisition of Plaid, asserting that it’s an acquisition that’ll see Visa “eliminate a nascent competitive threat that would likely result in substantial savings and more innovative online debit services for merchants and consumers”.
Particularly, the DOJ presses that Plaid represents a potential rival to the Visa-Mastercard payments domination in the US, stating that the payments startup had plans to enter the money movement market where Visa and Mastercard dominates and that Visa swooped in to acquire the startup for a very high price as an “insurance policy” against the formation of a “formidable competitor to Visa and Mastercard”.
The DOJ is fighting Visa’s proposed Plaid acquisition in court. If the deal pulls through at the end, it’ll mark one of the biggest fintech acquisitions ever and a big one for Plaid, which is backed by over $300 million in outside funding.