Visa Acquired Plaid for a Whooping $5.3 Billion

Visa, in order to expand its presence in the burgeoning field of electronic payments, has agreed to buy Plaid Inc. for $5.3 billion which is double what Plaid was reportedly valued at during its last fundraising in 2018.The company seeks to tap into consumers’ increasing usage of financial-technology apps and noncard payments and to make the payments giant more varied by increasing the access to the growing financial technology space.

Plaid is a fintech firm that enable consumers to conveniently share their financial information with thousands of apps and services such as Venmo, Coinbase Inc. and Acorns Grow. The firm says that it integrates with more than 11,000 banks and connects to more than 200 million consumer accounts. The startup bought Quovo two years ago to move beyond just banking, and into broader financial services and investments. Visa was an early investor in Plaid, which also received investments from high-profile tech investors including Mastercard, Goldman Sachs and Mary Meeker.

Visa’s primary reasons for buying Plaid is that the deal will give Visa an opportunity to sell enhanced payment capabilities and related value-added services, thereby ballooning the base of customers and strengthening its relationship with financial institutions. While on the other hand, Plaid will be able to use the acquisition to leverage Visa's global brand in expanding its own business. After Visa's acquisition of Plaid, the company with it's banking partners including JPMorgan Chase & Co. can work towards the development of giving consumers more security and control over how their financial data is used. Protecting customer data and helping them share that information safely has been a top priority for a long time.

The deal is expected to close in the next three to six months, with the expectation of addition of 80 to 100 basis points to Visa's revenue growth in fiscal 2021.

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