The end of its $ 5.3 billion deal with Visa means data aggregator Plaid will continue to operate as an independent player in financial services, a sector that has seen spectacular growth in fintech in the months following the initial announcement of the merger in January 2020.
While the canceled deal could be seen as a setback for the startup, Plaid said he sees an opportunity instead.
“The opportunity for Plaid and for fintech in general is so much greater as the first week of January 2021 approaches than it was at the start of 2020,” said John Pitts, head of policy at Plaid. “We have the opportunity to become independent, and we’re really excited about it.”
The deal, which began in a year that saw several other major fintech acquisitions, has grown into the target of a lawsuit by the Department of Justice (DOJ) in November, after the department said the acquisition would have stifled competition in the payments industry.
After the termination, Visa said she was confident she would have won the dispute, while Plaid CEO Zach Perret expressed disappointment at the delay caused by the DOJ’s lawsuit.
“DOJ deadlines are much slower than expected,” he said. The Wall Street Journal. “The reality of leaving our business in a multi-year review … is not in the best interests of our customers.”
The two companies’ decision to drop the deal means Plaid will remain independent in an industry that looks very different from what it was 12 months ago, thanks to the coronavirus pandemic.
“The amount of consumer adoption of fintech that we saw during the pandemic was significantly higher than anything we had seen in the previous five years of existence. We believe this will most likely continue to grow. ‘accelerate even on the way out of the pandemic, “Pitts said. “Plaid has a very optimistic view of what our opportunity looks like as an independent business that is at the heart of this growth and at the heart of consumer demand for financial services going forward.”
Plaid’s customer base has grown by around 60% over the past year as more people have gone digital amid the pandemic, a spokesperson for Plaid said. Barron last week.
Plaid’s top priority now will be working with the startup’s more than 11,000 banking partners and financial institutions and executing an ambitious application programming interface (API) strategy, Pitts said.
Plaid, which connects fintech apps like Venmo, Chime, and TransferWise to customers’ bank accounts, pledges to devote 75% of its traffic to APIs by the end of 2021, a project Pitts called “a huge challenge. “and” the most important thing we can do. “
“In terms of the bank-aggregator-fintech relationship and the form of open financing, this is a tectonic change in the basic infrastructure layer, and it is the one that Plaid is driving,” he said. declared.
The company announced in May that it was launching an API platform called Tile exchange, a product that the startup says will help small financial institutions compete with Wall Street banks.
The platform is an effort to help small institutions keep up with big players away from sharing credentials, a practice that has been the subject of privacy concerns among banks when it comes to to associate with data aggregators.
The company is also looking internationally, with plans to more than double its European workforce in 2021, according to CNBC.
Plaid, which recently added British fintechs Curve and Cleo to its list of European clients, plans to increase its European workforce from 40 to 100 by the end of the year.