American trustbusters force Visa to back off Plaid

IN EARLY 2019 an executive at Visa, a giant payments firm, sketched a picture of an island volcano. He scribbled the current capabilities of Plaid, a Silicon Valley fintech firm founded in 2012, in “the tip showing above the water”. The startup, which has developed a platform connecting consumer accounts at more than 11,000 banks to financial apps, was offering services like “bank connections”, “account validation” and “asset confirmation”. But he warned of the “massive opportunity” beneath the surface. Plaid could expand into fraud detection, making credit decisions and, scariest of all, payments infrastructure.
This opportunity for Plaid looked like a threat to Visa. Ten months later, in January 2020, Visa announced that it would acquire its putative rival for $5.3bn. This sum was more than 50 times the revenue Plaid earned in 2019 (though a modest lift for a company with a market capitalisation of over $460bn). Al Kelly, Visa’s boss, described the deal as an “insurance policy”. 

These details—volcano sketch and all—were included in the complaint America’s Department of Justice filed in November, when it sued to block the deal. The acquisition, the DoJ said, would snuff out a competitor in the debit-card business, in which Visa has a market share of around 70% and profit margins nudging 90%. In 2019 Visa earned…
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