Visa Just Announced a Huge Acquisition

According to a Wall Street Journal report, Visa will acquire Silicon Valley fintech company Plaid, which powers Venmo as well as other banking apps.

Both companies announced the deal that has a value of $5.3 billion.

Plaid’s API software (also known as “plumbing”) lets start-ups connect to users’ bank accounts and works with Venmo, mobile investing app Robinhood and both cryptocurrency exchanges Coinbase and Gemini. According to the company, 25% of people in the United States with bank accounts have connected to the fintech company through an app.

Visa was an early investor in the start-up. Goldman Sachs was also an early investor and was the exclusive advisor on the deal, according to a person familiar with the negotiations.

Visa CEO Al Kelly said Plaid has seen a compound annual growth rate of roughly 100% since 2015 and that the deal was a “long-term” play and would position Visa for the next decade.

“This fits well, strategically,” Kelly commented. “We’re excited about new businesses and the ability for this to
accelerate our revenue growth over time.”

Visa said the deal has the potential to add as much as 100 basis points to the company’s net revenue growth by the year 2021.

CEO Zach Perret told CNBC the Plaid team got to know Visa through its initial strategic investment. According to Perret, the Visa brand would help Plaid scale its products and global footprint.

“We feel fortunate to have been there for the early days of fintech, and to have helped develop that ecosystem,” Perret said. “This represents an important milestone, and the ability to work with Visa to make our products products much bigger and better — both domestically and internationally.”

Disclaimer: We have no position in Visa Inc. (NYSE: V) and have not been compensated for this article.