Payments giant Visa acquiring crypto-serving fintech firm, Plaid

Payments giant Visa acquiring crypto-serving fintech firm, Plaid
Written by:
Ali Raza
March 11, 2020
  • According to Visa's Monday announcement, the payments giant has decided to acquire a crypto-serving fintech firm, Plaid.
  • The cost of the acquisition is $5.3 billion, and Visa feels confident that the move will allow it to expand and improve its business.
  • Further, the company expects to see the acceleration of its long-term revenue growth trajectory thanks to the acquisition.

According to a recent announcement, Visa has recently made a decision to acquire Plaid, a crypto-serving fintech company, which will allow ie to enhance its existing card business. The announcement regarding the acquisition was made yesterday, January 13th, when Visa revealed that the acquisition cost will be $5.3 billion.

Further, the deal is likely to be closed over the course of the next 3-6 months, depending on regulatory approval. Meanwhile, Visa revealed that it will pay $4.9 billion in cash, while the remaining $400 million of deferred equity and retention equity. Even so, the amount that the company is willing to pay is well over Plaid’s valuation, which recently exceeded $2.5 billion.

Why is Visa after Plaid?

Plaid is a company founded back in 2012, that helps users with connecting their apps to their bank accounts. In this aspect, it is not too different from PayPal’s Venmo. However, this is also a big deal for the crypto industry, as the startup also serves cryptocurrency businesses, such as the Abra wallet, and the largest US crypto exchange, Coinbase.

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As for Visa, the company’s goal is to use the acquisition to enter new businesses, and improve its existing business, as mentioned. Visa’s chairman and CEO, Al Kelly, commented on the deal by saying that the combination of Plaid and Visa will allow the latter to become the epicenter of the fintech world.

The company would be able to expand its addressable market but also speed up its long-term revenue growth. In other words, the acquisition might allow Visa to add 80-100 basis points to its revenue growth by next year.

Prior to the acquisition, Visa invested an unknown amount into Plaid, same as Mastercard. Meanwhile, the startup itself managed to raise over $350 million in venture capital funding over the course of the last 8 years.