Visa Inc. announced that they acquired US payments giant Plaid, a network that allows people to easily connect their financial accounts. Visa will pay a total price of 5.3 million dollars for the acquisition.
Visa acquired Plaid and the execs said…
“We are very excited about the acquisition of Plaid and how it increases the growth trajectory of our business,” said Al Kelly, CEO and president of the Visa. “Plaid is a leader in the fast-growing fintech world . The acquisition, combined with our multiple efforts already aimed at fintechs, will position Visa to provide even more value to developers, financial institutions and consumers.”
“Plaid’s mission is to enable easier money management for everyone, and we are happy with this opportunity to continue to carry that promise forward on a global scale,” said Zach Perret, CEO and co-founder of Plaid. “Visa is trusted by billions of consumers, businesses and financial institutions as a fundamental part of the financial ecosystem.”
What will Visa gain by buying Plaid?
The acquisition of Plaid by Visa represents an entry for the to new businesses and complementary improvements to the current Visa business as well. Plaid’s fintech-focused business will open up new market opportunities for Visa both in the United States and internationally.
The combined force of Visa and Plaid is expected to create the opportunity to provide enhanced payment capabilities and value-added services for fintech developers and thus, the two companies can provide significant benefits to financial institutions and consumers too.
“We have close relationships with both Visa and Plaid . The combination of Plaid’s capabilities with the security and scale of the global Visa network will give us excellent opportunities to improve our products, ”said Dan Schulman, president and CEO of PayPal.
What is Plaid, who are they and what are they doing?
Plaid is a US fintech startup, that raised 250 million dollars in a Series C in December 2018, which Visa and its rival MasterCard participated. After this funding, the startup was valued at $2.65 billion.
Plaid has a software that can access customers’ bank-account data and aggregate it for other financial-services providers. The company is a leader in enabling connectivity at this size. One in four people with a US bank account used Plaid for connecting 2,600 fintech developers across over 11,000 financial institutions.
What can Visa do/create after buying Plaid?
When finalized, this acquisition helps Visa to create a platform which allows moving money between bank accounts. This can position Visa in the agile fintech startup world and put them in the same league with money-transfer services such as Zelle and Paypal’s Venmo.
When will the acquisition be finalized?
The transaction, however is subject to regulatory approvals to be finalized. Visa will finance the transaction with available cash and debt issuance at the appropriate time. This transaction will not have an impact on the share repurchase program or dividend policy previously announced by Visa. The whole process is expected to be completed in the next three to six months.