- Visa announced that it has signed a definitive agreement to acquire Plaid for $5.3 billion. These are the details about the deal.
Visa recently announced it signed a definitive agreement to acquire Plaid for $5.3 billion. Plaid is a network that makes it easier for people to secure connect their financial accounts to the apps that they use.
Plaid’s products essentially enable consumers to conveniently share their financial information with thousands of apps and services like Acorns, Betterment, Chime, Transferwise, and Venmo. As users download and install their apps, Plaid is what it used for linking their bank accounts.
The connectivity between financial institutions and developers has become important in facilitating consumers’ ability to use fintech applications. And 75% of the world’s Internet-enabled consumers used a fintech application to initiate money movement in 2019 versus 18% in 2015, according to EY.
Plaid has been driving this technology at scale. Now one in four people with a U.S. bank account have used Plaid to connect to more than 2,600 financial technology developers across more than 11,000 financial institutions.
“We are extremely excited about our acquisition of Plaid and how it enhances the growth trajectory of our business,” said Al Kelly, CEO and chairman of Visa. “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.”
Plaid was founded by Zach Perret and William Hockey. Prior to launching Plaid, Hockey and Perret both worked at Bain & Company.
“Plaid’s mission is to make money easier for everyone, and we are excited for this opportunity to continue delivering on that promise at a global scale,” explained Zach Perret, CEO and co-founder of Plaid. “Visa is trusted by billions of consumers, businesses and financial institutions as a key part of the financial ecosystem, and together Visa and Plaid can support the rapid growth of digital financial services.”
Visa’s decision to buy Plaid represents an entry into new businesses and complementary enhancements to Visa’s existing business. For example, Plaid’s fintech-centric business opens new market opportunities for Visa both in the U.S. and internationally. And the combination of Visa and Plaid provides the opportunity to deliver enhanced payment capabilities and value-added services to fintech developers. Plus 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.
After the deal is closed, the combination of Visa and Plaid is expected to provide significant benefits to developers, financial institutions, and consumers.
“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,” stated Dan Schulman, president and CEO at PayPal.
Plaid raised $310 million in VC funding before this deal. Of that amount, over $250 million was raised in late 2018 at a $2.65 billion valuation with Index and Kleiner as the lead investors. The investors in that round also included Amex, Citi, Mary Meeker, Mastercard, and Visa.
Going forward, Plaid will be running as an independent unit at Visa. And Perret will be reporting to Visa Chief Product Officer Jack Forestell.
“We believe Visa’s acquisition of Plaid is an important development in giving consumers more security and control over how their financial data is used. Protecting customer data and helping them share that information safely has long been a top priority for Chase. We look forward to partnering with Visa to continue building a great experience for our shared customers,” added Gordon Smith, co-president at JPMorgan Chase and CEO of Consumer and Community Banking.