DOJ Sues to Block Visa’s $5.3 Billion Acquisition of Plaid

The United States Department of Justice is filing a lawsuit in a bid to halt Payments Payments One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonl One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonl Read this Term giant Visa’s $5.3 billion offer to acquire Silicon Valley start-up, Plaid over antitrust concerns.

In a statement, the DOJ said Plaid, which claims to connect more than 200 million consumer accounts with 11,000 banks, is developing a payments platform that would challenge Visa’s monopoly.

To confirm its point of view, the department quoted Visa’s CEO, Alfred Kelly as saying the acquisition is an “insurance policy to protect their important US debit business.” The complaint states that Kelly further justified the deal to Visa’s board as a “strategic, not financial” move, and noted that in part because “our US debit business i[s] critical and we must always do what it takes to protect this business.”

Unless acquired, which was set to be one of the biggest Fintech Fintech Financial Technology (fintech) is defined as ay technology that is geared towards automating and enhancing the delivery and application of financial services. The origin of the term fintechs can be traced back to the 1990s where it was primarily used as a back-end system technology for renowned financial institutions. However, it has since grown outside the business sector with an increased focus upon consumer services.What Purpose Do Fintechs Serve?The main purpose of fintechs would be to suppl Financial Technology (fintech) is defined as ay technology that is geared towards automating and enhancing the delivery and application of financial services. The origin of the term fintechs can be traced back to the 1990s where it was primarily used as a back-end system technology for renowned financial institutions. However, it has since grown outside the business sector with an increased focus upon consumer services.What Purpose Do Fintechs Serve?The main purpose of fintechs would be to suppl Read this Term deals, Visa was concerned that Plaid would pose a threat that could cut out between $300 to 500 million from US debit business by 2024.

Assistant attorney general, Makan Delrahim of the department’s antitrust division said Visa leveraged its monopolist position in online debit services to extract billions of dollar from American individuals and businesses.

Visa Describes DOJ’s Attempt as “Legally Flawed”

“Visa is attempting to acquire Plaid, a nascent competitor developing a disruptive, lower-cost option for online debit payments. If allowed to proceed, the acquisition would deprive American merchants and consumers of this innovative alternative to Visa and increase entry barriers for future innovators,” Delrahim added.

For its part, Visa said it strongly disagrees with these claims and described the DoJ’s attempt to block the acquisition of Plaid as “legally flawed” and “contradicted by the facts.” It added that the action reflects a lack of understanding of Plaid’s business and the highly competitive payments landscape in which Visa operates.

“The combination of Visa and Plaid will deliver substantial benefits for consumers seeking access to a broader range of financial-related services, and Visa intends to defend the transaction vigorously,” it added.

Visa already promoted its acquisition of Plaid, which launched in 2013, as an important development in giving consumers more security and control over how their financial data is used. Beyond this, the company said it expects the takeover to increase its net revenue by at least one percent in 2021.

Plaid co-founders, Zach Perret and William Hockey said that involving the Visa brand would help their company scale its products and global footprint.

Plaid, which reportedly connects nearly a quarter of US bank accounts through an app of one of its clients, counts high-profile customers like Betterment, Venmo, Robinhood and also the top US cryptocurrency exchanges, including Coinbase and Gemini.