Visa has announced that it will acquire fintech startup Plaid in a $5.3 billion deal. The payments giant revealed the planned acquisition Monday, describing the deal as one that would shape its business in the next decade. Plaid connects users’ bank accounts to other fintech platforms, including crypto-focused businesses.
Founded in 2013, Plaid has grown rapidly in the U.S. and now boasts of connecting over 2,600 fintech developers to at least 11,000 financial institutions. Some of its best-known clients include P2P payments app Venmo, investment platform Betterment, fintech startup Acorns, financial services giant American Express and British transfer service TransferWise. Plaid also serves crypto companies, including crypto exchanges Gemini and Coinbase (NASDAQ: COIN), as well as crypto wallet Abra.
With its success in acquiring new clients, Plaid has attracted investment from some of the most renowned venture capital firms. According to Crunchbase data, the startup has raised $353.3 million so far. In its last fundraising round, the company brought in $250 million from several investors, led by Kleiner Perkins and Index. It later emerged that Visa and its close rival Mastercard had also participated quietly in the round.
At the time, Plaid was valued at $2.65 billion, exactly half its valuation with the acquisition.
The acquisition will help Visa to enhance the trajectory of its growth, Al Kelly, the chairman and CEO of the California-based giant stated. He added, “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.”
The company believes that Plaid will give it an entry into new businesses, while also complementing Visa’s existing business. It stated:
“First, Plaid’s fintech-centric business opens new market opportunities for Visa both in the U.S. and internationally. Second, the combination of Visa and Plaid provides the opportunity to deliver enhanced payment capabilities and related value-added services to fintech developers. Finally, the acquisition will enable Visa to work more closely with fintechs through all stages of their development and drive growth in Visa’s core business.”
Dan Romero, the general manager of Coinbase Consumer division explained, “If you have a scammer trying to buy a $100,000 in crypto, and the bank account itself isn’t funded to that level, the ability to check that in real time is really, really valuable. We have moved billions of dollars through the U.S. banking system through Plaid.”
New to blockchain? Check out CoinGeek’s Blockchain for Beginners section, the ultimate resource guide to learn more about blockchain technology.