Visa had previously taken part in a $250m Series C funding round of Plaid
Plaid to be acquired by Visa. (Credit: Pete Linforth from Pixabay)
Visa has agreed to acquire Plaid, a California-based fintech startup that links consumer bank accounts with fintech apps, in a deal worth $5.3bn.
The fintech company is said to be a network that makes it easy for users to connect their financial accounts securely to the apps they use for managing their financial lives.
The firm’s products are designed to let users to share their financial details with Venmo, Acorns, Betterment, Transferwise, Chime, and other apps and services. The apps and services help users in planning their spending, monitor their investments, and improve savings.
According to Visa, connectivity between financial organisations and developers has become important increasingly to allow the use of fintech applications by consumers. The payments technology company said that currently, one in four bank account holders in the US have used Plaid to connect to over 2,600 fintech developers across more than 11,000 financial organisations.
Visa had previously invested in Plaid
Last year, the fintech company revealed that it had secured investment from both Visa and Mastercard in a $250m Series C financing round. Prior to that, in January 2019, Plaid acquired Quovo, a New York-based fintech start-up, engaged in providing wealth management and brokerage data.
Plaid CEO and co-founder Zach Perret said: “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.
“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 said that by acquiring the fintech startup, it will enter into new businesses apart from gaining complementary improvements to its existing business.
The payments technology company said that Plaid’s fintech-centric business will give it new market opportunities in both the US and the rest of the world. Furthermore, the combination of the two companies allows them to offer enhanced payment capabilities alongside related value-added services to fintech developers.
The transaction is also expected to help the payments technology firm to work more closely with fintechs through all stages of their development and deliver growth in its core business.
Visa CEO and chairman Al Kelly said: “This acquisition is the natural evolution of Visa’s 60-year journey from safely and securely connecting buyers and sellers to connecting consumers with digital financial services.
“The combination of Visa and Plaid will put us at the epicenter of the fintech world, expanding our total addressable market and accelerating our long-term revenue growth trajectory.”
The transaction will be subject to regulatory approvals and customary closing conditions. It is expected to be completed in the next three to six months, said Visa.