Although Visa’s negotiation on Plaid is expensive but necessary. Plaid is a resourceful tool if well utilized by Visa in the next few decades. No doubt, the Fintech ecosystem will change with this new development. Let’s dive into some insights as Visa buys Plaid.
Credit card and Fintech giant – Visa will be taking over the financial technology start-up Plaid for $ 5.3 billion. The companies announced a corresponding agreement on Monday after the American market closed.
Plaid is a Fintech company that offers software for linking digital payment apps such as PayPal’s Venmo or Transferwise with bank accounts. The company was founded in 2013 and is based in California, San Francisco.
Visa plans to complete this new acquisition, which is subject to the digital Fintech regulatory approval, in 3 to 6 months. According to WSJ (Wall Street Journal), Plaid was only valued at $ 2.65 billion in a 2018 funding round.
Research shows Visa was already among the donors back then. The acquisition is intended to introduce new ways for the group to process payments and help to benefit from the rapid growth of digital financial services.
In the Fintech space, Plaid’s exit price is a triumph for all its investors, who put a combined $353.3 million into the company, according to Crunchbase data.
Most important among those rounds was a $250 million infusion that came in late 2018. Index and Kleiner led that round, valuing Plaid at $2.65 billion, or 50% of its final sale price (this ratio is OBVIOUSLY not a coincidence).
At the same time, it was later revealed, that the two biggest card giants, Mastercard and Visa also took part in the round, with TechCrunch reporting in 2019 that the two payments giants “quietly participated in the round.”
Whether those investments were large enough to grant Visa information rights isn’t clear, but certainly, the two credit card giants had more insight into what Plaid was doing than they did before their investment.
From the figures, we can assume that Plaid was already doing well as a private company; no company pays twice a multi-billion-dollar valuation for a firm unless they want to keep it away from their core business, or a key competitor.
We look forward to the final approval from the Fintech regulation. This is the biggest Fintech deal that has ever been recorded.
