Visa Buys FinTech Startup Plaid for $5.3 Billion
Financial giant Visa announced yesterday that it has acquired fintech startup Plaid for $5.3 billion. Founded by Duke University alum, Plaid makes it easy for people to securely connect their financial accounts to the apps they use to manage their financial lives. Plaid will help expand its access to financial-technology firms while accelerating its movement outside of cards, Visa CEO says.
Plaid’s products enable consumers to conveniently share their financial information with thousands of apps and services such as Acorns, Betterment, Chime, Transferwise and Venmo. Consumers rely on these apps and services to help plan their spending, increase their savings and monitor their investments. For example, when a user sets up a Venmo account, it is Plaid that enables the user to link their bank account to their Venmo account.
Founded in 2012 by William Hockey and Zachary Perret, the San Francisco, California-based Plaid provides companies the tools and access needed for the development of a digitally-enabled financial system. The startup makes it easier and safer for developers — from the smallest startups to the largest financial institutions — to build innovative financial services and applications. Before this acquisition, Plaid has raised a total of $353.3M in funding over 6 rounds. Their latest funding was raised on Dec 11, 2018 from a Series C round.
The acquisition represents Visa’s entry into new businesses and complementary enhancements to Visa’s existing business. According to Visa, 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.
Connectivity between financial institutions and developers has become increasingly important to facilitate consumers’ ability to use fintech applications. 75 percent of the world’s internet-enabled consumers used a fintech application to initiate money movement in 2019 versus 18 percent in 20151. Plaid has been a leader in enabling this connectivity at scale. Today, one in four people with a U.S. bank account have used Plaid to connect to more than 2,600 fintech 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’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,” said 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.”
“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,” said Kelly. “The combination of Visa and Plaid will put us at the epicenter of the fintech world, expanding our total addressable market and accelerating our long-term revenue growth trajectory.”
Once 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,” said Dan Schulman, president and CEO, PayPal.
“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,” said Gordon Smith, co-president, JPMorgan Chase and CEO of Consumer and Community Banking.