The U.S. Department of Justice (Department of Justice) wants to block Visa plans to buy the Plaid of financial technology start-ups, on the grounds that it will be detrimental to healthy competition and development in the payment industry. Attorney at the u.s. department of justice said the plan could exacerbate Visa "monopoly" on debit card transactions ". For antitrust reasons, the $5.3 billion acquisition announced in february "must stop ".
Plaid Co-founder and CEO Zach Perret( right)
"By acquiring plaid, visa will eliminate an emerging competitive force that could save businesses and consumers significant amounts of money and provide them with more innovative online debit card services," the Justice Department said in the indictment The indictment has been filed in a federal court in Northern California.
According to Visa chief executive, Al Kelly, the Department of Justice said the deal was a "policy" designed to eliminate "threats to our important American debit business ".
Plaid, a San Francisco based fintech company, uses APIs to connect consumer bank accounts to popular financial applications such as venmo and Robin Hood. The company, which works with more than 11000 U.S. banks, has been developing a product that could replace the Visa debit card service, according to the complaint.
Visa said in a statement that the company "strongly opposes" that the Department of justice "prevents visa from acquiring plaid and that the Department's attempt is legally flawed and inconsistent with the facts.". Plaid declined to comment on the lawsuit.
"The move reflects the Department's lack of understanding of the plaid business and the competitive payment sector in which visa operates," visa said
U.S. lawyers point out that Visa has a 70 percent share of the U.S. debit card market, while its rival MasterCard (Mastercard) is unable to "gain substantial market share" or "limit Visa monopolies ". They also highlighted barriers to entry for creating a new debit card product.
"Visa's online lending monopoly rarely faces significant threats. Plaid is such a threat. " "Plaid plans to use this technology, coupled with its existing relationships with banks and consumers, to facilitate transactions between consumers and businesses and compete with visa."
Bain Consulting (Bain) last week
Visa's acquisition of plaid is one of many high-profile deals that the U.S. Department of justice is under considerable pressure this year.
According to the Wall Street Journal, credit karma is in talks with square to sell its tax preparation business to square to avoid antitrust concerns. Intuit announced earlier this year that it would buy credit karma for $7 billion and own turbotax. Regulators may worry that the merger will give consumers less choice when filing their taxes online. MasterCard announced earlier this year that it plans to buy Plaid's rival, fineness, for about $1 billion.