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Sunday, January 17, 2021

U.S. Files Lawsuit to Block Visa’s Acquisition of Plaid

The U.S. Department of Justice filed an antitrust lawsuit with the federal court in San Francisco on Thursday to hamper Visa’s pending $5.3 billion acquisition of financial technology firm Plaid.

The U.S. Department of Justice filed an antitrust lawsuit with the federal court in San Francisco on Thursday to hamper Visa’s pending $5.3 billion acquisition of financial technology firm Plaid.

“Visa is a monopolist in online debit transactions, extracting billions of dollars in fees annually from merchants and consumers,” the Justice Department said in the complaint. 

“Plaid, a financial technology firm with access to important financial data from over 11,000 US banks, is a threat to this monopoly: it has been developing an innovative new solution that would be a substitute for Visa’s online debit services.”

According to the department, Visa’s takeover of Plaid “must be stopped” because would “eliminate a nascent competitive threat that would likely result in substantial savings and more innovative online debit services for merchants and consumers.”

Visa CEO and Chairman Al Kelly released a statement in January, saying that the firm’s acquisition of Plaid would revamp its stature and access to the booming financial technology space.

In response to the Justice Department’s complaint, the card giant said that the department’s move “reflects a lack of understanding of Plaid’s business.”

“Visa’s business faces intense competition from a variety of players – but Plaid is not one of them,” Visa said in a statement.

Visa insisted that its transaction with Plaid would be beneficial for its consumers and would create a desirable impact on the competition.

“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.

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