Visa has just announced on Monday, January 20, that is has agreed to acquire Plaid. Inc, a fintech privately held startup for $5.3 billion, as reported by local news outlets.
Through the acquisition, Visa will have greater access to the ever-expanding fintech space, a fact that has increased competition and the M&A activity in the industry.
Visa is clearly trying to move away from the very traditional card-swiping payments business, having engaged in several international acquisitions recently, including the acquisition of Verifi, a chargeback-reduction firm and Earthport, an international services company.
The Plaid deal comprises of $4.9 billion in cash and the rest will come in deferred equity and retention equity scheme. The deal is expected to close in the upcoming 3-6 months.
What is interesting about Plaid is that the company has built technical infrastructure APIs that connect clients, developers and financial institutions. Plaid’s technology allows customers to link their mobile apps such as Chime and Venmo to their bank accounts and transact more easily in the digital space.
Plaid has also established itself as a solid player in the cashless and digital economy, as reported by the company itself and media, one in four people in the US use Plaid’s systems.
Plaid’s investors include Goldman Sachs and Andreessen Horowitz, among others.
This is what the CEO and Chairman of Visa said regarding Plaid:
Plaid is a leader in the fast growing fintech world. The acquisition, combined with our many fintech efforts already underway, will position Visa to deliver even more value for developers, financial institutions and consumers.