Visa Inc. has landed a blockbuster deal to acquire Plaid, a data network that connects bank data to apps like Venmo, Chime, Betterment and other major fintechs. The price tag: $5.3 billion.
The acquisition will link Visa’s global credit and debit payments network with the startup firm, which connects about 25% of U.S. banking customers to financial apps, effectively linking more than 2,600 fintech developers to more than 11,000 financial institutions.
“Plaid opens up new market opportunities by significantly expanding Visa’s network capabilities and provides a terrific platform for extending our integrated payments solutions and value added services and positions Visa to capitalize on the fintech driven revolution that is happening in financial services,” Al Kelly, chairman and CEO of Visa said during a conference call,
Plaid co-founder and CEO Zach Perret said the agreement would help his company expand into new markets and provide a set of services at a rate that only a global network like Visa could provide.
“The more we have partnered with and learned about Visa the more excited we are about the potential for accelerating our mission and impact by utilizing the global scale of Visa, its deep expertise in building financial networks and of course its world class brand,” he said during the call
He will continue to run the Plaid business and report to Visa.
Kelly said the acquisition would help Visa and Plaid offer expanded services to customers in four ways:
- Partner more extensively with a broad range of fast growing fintechs through the delivery of developer services that Visa does not currently provide.
- Deliver a variety of payment capabilities and value added services as part of a network-of-networks strategy.
- Provide high value offerings in international open banking markets.
- Offer consumer data management solutions that put consumers at the center of managing their data and how and where it is used.
Erika Baumann, senior analyst at Aite Group, said the agreement was in line with sentiments expressed by Visa in the past couple of years and recent moves by the payments company to accelerate its reach.
“As Visa embeds itself into the payments architecture, connectivity is so important to building out a robust network to create a rich payments footprint that is as large as possible,” Baumann told Mobile Payments Today via email. “Visa and Mastercard have both exhibited their commitment to, as well as the importance of, a business strategy that reaches beyond the traditional card network and owning the payment end-to-end, agnostic of payment type.”
Nick Maynard, senior analyst at Juniper Research, said the acquisition was another example of a major card network to get ‘beyond the card’ and significantly diversify its revenue stream.
“Visa’s acquisition of Plaid is particularly noteworthy, given that Mastercard had previously invested alongside Visa in a previous funding round,” he said. “This acquisition also reflects the importance of Open Banking, which has the potential to completely disrupt previously established banking models.”
The agreement is subject to regulatory approval and is expected to close in three to six months.
Cover image: Plaid