The U.S. Justice Department sued to block Visa Inc.’s $5.3 billion acquisition of Plaid Inc., accusing Visa of using the deal to eliminate an emerging threat to its online debit business.
The Justice Department filed an antitrust complaint in federal court in San Francisco Thursday, saying the Plaid deal would illegally extend Visa’s dominant position.
“By acquiring Plaid, Visa would eliminate a nascent competitive threat that would likely result in substantial savings and more innovative online debit services for merchants and consumers,” the government said.
The deal would give Visa control over an important data provider to apps like PayPal Holdings Inc.’s Venmo, which allows consumers to send money to friends and merchants without using Visa’s network.
Visa said it strongly disagrees with the Justice Department’s lawsuit, which it said is “legally flawed and contradicted by the facts.”
“This action reflects a lack of understanding of Plaid’s business and the highly competitive payments landscape in which Visa operates,” Visa said in a statement. “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.” Plaid declined to comment.
Visa shares rose 2.9% to $199.63 at 11:04 a.m. after earlier rising as much as 3.6%. The stock has advanced 6.4% this year, compared with the 32% gain of the S&P 500 Information Technology Index.
Regulators have long had antitrust concerns about the market power Visa and its rival Mastercard Inc. wield over global payments systems. The two have faced pressure to lower the fees they set on card payments from governments around the world, including in the U.S.
With Plaid, Visa would gain access to the information flow between 200 million consumer bank accounts and 2,600 financial technology apps. Those connections could help the company further its push into new areas like real-time payments and digital wallets.
Bloomberg News
Visa shares rose 3% to $199.81 at 10:38 a.m. after earlier rising as much as 3.6%. The stock has advanced 6.4% this year, compared with the 32% gain of the S&P 500 Information Technology Index.
Regulators have long had antitrust concerns about the market power Visa and its rival Mastercard wield over global payments systems. The two have faced pressure to lower the fees they set on card payments from governments around the world, including in the U.S.
With Plaid, Visa would gain access to 200 million consumer bank accounts and 2,600 financial technology apps. Those connections would help the company further its push into new areas like real-time payments and digital wallets.
Fintech-Insight is dedicated to delivering unbiased and dependable insights into cryptocurrency, finance, trading, and stocks. However, we must clarify that we don't offer financial advice, and we strongly recommend users to perform their own research and due diligence.