Visa has announced it has signed a definitive agreement to acquire Plaid, an Open Banking network that makes it easy for people to connect their financial accounts to the apps they use to manage their financial lives. Visa will pay total purchase consideration of $5.3 billion for the acquisition.
Plaid’s products enable consumers to conveniently share their financial information with thousands of apps and services such as Acorns, Betterment, Chime, TransferWise and Venmo. Consumers rely on these apps and services to help plan their spending, increase their savings and monitor their investments. For example, when a user sets up a Venmo account, it is Plaid that enables the user to link their bank account to their Venmo account.
Connectivity between financial institutions and developers has become increasingly important, in an Open Banking environment, to facilitate consumers’ ability to use FinTech applications. 75% of the world’s internet-enabled consumers used a FinTech application to initiate money movement in 2019 versus 18% in 20151. Plaid has been a leader in enabling this connectivity at scale. Today, one in four people with a US bank account have used Plaid to connect to more than 2,600 FinTech developers across more than 11,000 financial institutions.
“Plaid’s mission is to make money easier for everyone, and we are excited for this opportunity to continue delivering on that promise at a global scale,” said Zach Perret, CEO and co-founder of Plaid. “Visa is trusted by billions of consumers, businesses and financial institutions as a key part of the financial ecosystem, and together Visa and Plaid can support the rapid growth of digital financial services.”
Visa’s acquisition of Plaid represents both an entry into the new Open Banking businesses and complementary enhancements to Visa’s existing business. First, Plaid’s FinTech-centric business opens new market opportunities for Visa both in the US and internationally. Second, the combination of Visa and Plaid provides the opportunity to deliver enhanced payment capabilities and related value-added services to FinTech developers. Finally, the acquisition will enable Visa to work more closely with FinTechs through all stages of their development and drive growth in Visa’s core business.
The transaction is subject to regulatory approvals and other customary closing conditions. Visa will fund the transaction from cash on hand and debt issuance at the appropriate time. This transaction will have no impact on Visa’s previously announced stock buyback program or dividend policy. The transaction is expected to close in the next three to six months.
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