FinTech: Visa Acquires Plaid

FACTS

  • The US card scheme Visa announced they are acquiring the FinTech Plaid for $5.3 billion.
  • This transaction will involve cash and (to a lesser extent) retention and deferred equity.
  • Goal: Take on a major part in the Open Banking revolution.
  • Plaid was founded in 2013 and headquartered in San Francisco. They built a technological platform enabling apps (such as Acorns and Venmo) to connect with consumers’ bank accounts, so they may feature provided mobile payment, investment and PFM services.
  • Plaid they integrate with more than 11,000 financial institutions in the US, in Canada and in Europe; they connect to more than 20 million customer accounts.
  • Their list of clients includes Acorns, Betterment, Citi, Coinbase, TransferWise, Venmo, etc.
  • this acquisition, Visa aims at new activities as well as at improving their existing services in the US and globally.
  • This deal is to close in the next three to six months, once the relevant regulatory approval granted.

CHALLENGES

  • Promising market. The American card scheme deems that in the US, one every four people with a bank account already used Plaid’s technology. This FinTech is positioned on a highly promising segment. Visa will then rely on this FinTech to speed up their growth and boost their revenue.
  • Visa already leads their market and successfully handles banks/merchants relationships. Their payment industry empire is being further expanded and they aim at successfully addressing banks’ and start-ups’ interactions, as well.
  • Win-win deal. The Californian start-up wants to stay partly independent, but they intend to rely on the group’s resources to keep growing.

MARKET PERSPECTIVE

  • Plaid closed a funding round in 2018: Visa and Mastercard were among investors. They were then valued $2.65 billion. Visa pulls out twice this amount for this acquisition.
  • Visa and Mastercard are betting on the latest technologies and have announced several buyouts over the months. Just days ago, Mastercard acquired RiskRecon, which combines AI and data analytics to assess companies’ cybersecurity.

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