With the acquisition of Plaid, Visa will now be able to work more closely with fintech businesses such as Venmo.
On Monday (13 January), Visa announced that it has signed a definitive agreement to acquire Californian fintech start-up Plaid. Visa will pay $5.3bn to acquire the company, which was founded in 2013 by William Hockey and Zachary Perret.
Plaid is a technology platform that makes it easier for developers to build financial services applications. The platform also enables individuals to securely connect their financial accounts to the apps they use, in order to manage their financial lives.
For example, when an individual sets up an account on US cash transfer app Venmo, it is Plaid that links the individual’s bank account to their Venmo account. The platform is also used by fintech firms such as Chime, TransferWise, Betterment and Acorns.
The growing popularity of fintech apps
In a statement, Visa said: “Connectivity between financial institutions and developers has become increasingly important to facilitate consumers’ ability to use fintech applications. 75pc of the world’s internet-enabled consumers used a fintech application to initiate money movement in 2019, versus 18pc in 2015.
“Plaid has been a leader in enabling this connectivity at scale. Today, one in four people with a US bank account have used Plaid to connect to more than 2,600 fintech developers across more than 11,000 financial institutions.”
Visa said that the acquisition represents both an entry into new businesses, and complementary enhancements to Visa’s existing business. The start-up’s fintech-centric business now opens new market opportunities for Visa, both in the US and internationally.
The financial services giant will now be able to work more closely with fintech through all stages of their development and drive growth in Visa’s core business.
Al Kelly, CEO and chair of Visa, said: “We are extremely excited about our acquisition of Plaid and how it enhances the growth trajectory of our business.
“Plaid is a leader in the fast growing fintech world with best-in-class capabilities and talent. The acquisition, combined with our many fintech efforts already underway, will position Visa to deliver even more value for developers, financial institutions and consumers.
“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 epicentre of the fintech world.”
PayPal president and CEO, Dan Schulman, said: “We have strong relationships with both Visa and Plaid. The combination of Plaid’s capabilities with the security and scale of Visa’s global network will provide us with exciting opportunities to enhance our products.”