DOJ Probes Visa’s Plaid Buy

  • General
  • October 28, 2020
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  • 4 minutes read

Zach Perret, CEO & Co-founder, Plaid.
Photo credit: Harry Murphy/Web Summit via Sportsfile, licensed under Creative Commons

The United States Department of Justice (DOJ) is scrutinizing payments giant Visa’s $5.3 billion acquisition of fintech company Plaid and could decide soon whether it’ll sue to block the acquisition over antitrust concerns, according to a report [paywalled] from the Wall Street Journal. According to the Journal, the US Justice Department has been making preparations for possible litigation over concerns that Visa’s acquisition of Plaid could limit growing competition in the payments sector.

Tied-up in potential litigation between the DOJ and Visa is the famous management consulting firm Bain & Company, which the DOJ has filed a petition against to respond to interrogations and produce documentary material related to its work on Visa’s proposed acquisition of Plaid.

For context, Plaid is a data transfer network that powers fintech and digital finance products for major fintech companies such as Venmo, TransferWise, Paysafe, Betterment, Acorns and the likes. Plaid is broadly a backbone for many fintech apps, providing connections between more than 11,000 banks and tens of millions of consumers.

It seems that the DOJ sees Visa’s acquisition of Plaid as one that could give the payments giant too much power over a big and still growing fintech sector. In another similar case, the DOJ is also reviewing a Plaid-like acquisition made by a major Visa competitor, Mastercard, which in June this year reached an $825 million deal to acquire Finicity, another data transfer network similar to Plaid.

Initially, Visa said that it expected its acquisition of Plaid to be completed by mid-2020. Now, with scrutiny from US regulators, that time-frame has been extended and now carries the risk of the whole deal being shelved.

Plaid’s $5.3 billion acquisition by Visa marked one of the biggest deals in fintech history and a big win for Plaid, which as a privately-held company has raised just over $300 million in funding. More so, Plaid was only founded seven years ago and is on the cusp of a $5.3 billion exit within a relatively short period of existence.

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