The civil antitrust lawsuit filed Thursday alleges Visa’s plan to purchase Plaid Inc., a fintech company that aggregates consumer financial data, would reduce competition in the online payment space, and potentially give consumers fewer payment options. The Justice Department also believes the acquisition would make it harder for others to break into the online payment business in the future, according to a press release. Plaid is the fintech company behind apps such as Venmo, Betterment, and Acorns. It provides the technology those firms use to connect to consumer bank accounts, and with permission, collect spending, balance, and other financial data. According to the Justice Department, Plaid has been planning to use those banking connections to design a lower-cost payment network that would compete with Visa and give users a way to pay online retailers directly from their bank accounts rather than via a debit card. Such a payment option could remove networks like Visa from the transaction equation, and eliminate the revenue the networks currently get from processing online transactions. According to the Justice Department, Visa earns $0.39 on a $60 online debit transaction (the average size of online debits). Visa processed about 43 billion online debit transactions in 2019, earning approximately $2 billion, the complaint said. Visa first announced its $5.3 billion acquisition of Plaid in January. The National Retail Federation (NRF) was quick to ask the Justice Department to block the deal, citing the need for low-cost payment options for both consumers and retailers. Plaid would be Visa’s second-largest acquisition to date, and one of five fintech companies it has announced plans to buy or partner with since 2019. “Visa’s buying spree of fintech companies is an attempt to protect its dominance of the payment card industry and extend that control into mobile payments and other new payment options,” said NRF Chief Administrative Officer and General Counsel Stephanie Martz in a press release. “This acquisition would block badly needed competition and should not be allowed to move forward.” The Justice Department filed its antitrust lawsuit with the U.S. District Court for the Northern District of California.
