There’s been a big development in the payments space this week, with Visa Inc announcing on Monday that it has agreed to buy Plaid Inc, a privately held software startup, in a deal worth $5.3 billion, according to multiple reports from news outlets.
The deal will give the payments giant greater access to the growing financial technology space. The acquisition also highlights the increasing importance of companies operating in the digital and cashless economy.
Visa continues expansion
This is the latest move from Visa to expand outside of the traditional card-swiping payments model, having acquired cross-border services company Earthport and chargeback-reduction company Verifi last year, among other similar deals.
The $5.3 billion deal includes $4.9 billion of cash consideration and the rest in retention equity and deferred equity. The transaction is expected to close in the next three to six months.
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Plaid valued at $2.65 billion
Plaid Inc has built technical infrastructure APIs that connect consumers, traditional financial institutions, and developers. Namely, the company’s technology allows users to link their bank accounts to mobile apps such as Venmo, Chime, and more.
The company is backed by high-profile tech investors, including Mary Meeker and Andreessen Horowitz, as well as Goldman Sachs. The acquisition announced yesterday comes less than two years after the company was valued at $2.65 billion.
Plaid has established a strong position in servicing the digital and cashless economy. According to the San Francisco-based fintech firm, its systems have been used by one in four people with a bank account in the United States.
Visa Chairman and Chief Executive Officer Al Kelly said in Monday’s statement: “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.”