THE $5.3 BILLION DEAL
Visa, an established global payment provider, has announced plans to purchase Plaid, a fintech that connects other fintech apps such as Venmo to consumers’ data within the banking system. It has been announced Visa agreed to pay a total of $5.3 billion, with $4.9 billion in the form of cash and $400 million in the form of stock.
“We are extremely excited about our acquisition of Plaid and how it enhances the growth trajectory of our business,” said the CEO and chairman of Visa, Al Kelly. “Plaid is a leader in the fast growing fintech world with best-in-class capabilities and talent. The acquisition, combined with our many fintech efforts already underway, will position Visa to deliver even more value for developers, financial institutions and consumers.”
OVERVIEW OF PLAID
In just 2018 Plaid underwent a round of funding where it was valued at $2.65 billion, half of the valuation at which Visa has agreed to pay. Among investors into the fintech include Goldman Sachs Group Inc., Visa, MasterCard, and venture capitalist Mary Meeker. After being founded in 2012, the fintech company now has more than 200 million accounts on its platform. According to the company, roughly a quarter of people who have a U.S. bank account have used Plaid to connect the network of 11,000 financial institutions that it works with.
Plaid’s developer tools are used to power a wide-variety of popular fintech apps, such as Coinbase Venmo, Square Cash, Chime, Robinhood and more by providing the banking data needed for apps and websites to access user accounts. In 2019, Plaid expanded its services beyond the US. to Spain, France, Ireland, and the U.K. Through simply looking at the applications they serve, its quite clear Plaid is involved with some of the biggest and hottest fintechs within the U.S..
WHAT THIS MEANS FOR VISA
Visa’s acquisition of the fintech firm will help it maintain the powerful position the financial services powerhouse has had for years. With the tech-driven evolution of the financial industry still ongoing, Visa is certainly making long-term moves in order to tap into a user base that seems to be increasing annually. Now, not only will Visa serve a significant portion of the traditional banking system, but also offer additional payment services to the emerging fintechs disrupting it.