With Plaid Acquisition, Visa Makes a Big Play for the ‘Plumbing’ That Connects the Fintech World

Fortune | Rey Mashayekhi | Jan 14, 2020

Visa acquires plaid - With Plaid Acquisition, Visa Makes a Big Play for the ‘Plumbing’ That Connects the Fintech WorldIn late 2018, payments giants Visa and Mastercard both invested in fintech startup Plaid through a $250 million funding round that valued San Francisco-based firm at an impressive $2.65 billion.

Described as “strategic investments,” the two financial services heavyweights sought not only to provide Plaid with financial backing, but also to leverage the fintech firm’s sprawling technological capabilities to improve their own services.

See: Visa R&D Arm Develops a Blockchain System That Could Replace Financial Data Aggregators

“We’re really excited about working with [Plaid] to enhance payment experiences globally,”

Bill Sheedy, executive vice president of Visa’s strategy group, told Fortune at the time.

With Plaid’s APIs (application programming interfaces), Visa could potentially improve the customer experience via everything from fraud detection to real-time account balance verification—services that “reduce the friction around financial transactions,” as Sheedy put it.

A little over a year later, Visa has decided to come back for the whole thing.

Whether it beat its great rival Mastercard to the punch, or saw a deal that its East Coast rival did not see, is as yet unclear. But on Monday, Visa announced that it has agreed to acquire a 100% stake in Plaid in a deal valued at a whopping $5.3 billion (twice the firm’s late-2018 private valuation).

The transaction sees Visa snap up one of the more impressive growth stories in the ever-expanding realm of financial technology. Since launching in 2013, Plaid has made itself an indispensable piece of the fintech ecosystem—a company with the technological capabilities to connect one in four people with a U.S. bank account to thousands of apps and services, from Venmo to Robinhood, from Chime to Acorns.

Plaid likes to describe itself as the “plumbing” that makes the increasingly tech-enabled financial services world go round, a claim justified by the company’s already sizable reach. Given the eye-watering sum that Visa is prepared to fork over—not to mention the bullish noises coming out of the company’s C-suite on Monday afternoon—

it’s clear that the payments behemoth believes it is picking up an asset that will help it “capitalize on the fintech-driven evolution,” as Visa CEO Al Kelly put it.

“Fintechs are clearly reshaping financial services, and Plaid is unquestionably the leader in this space,” Visa president Ryan McInerney told Fortune on Monday.

The deal is about expanding Visa’s services beyond its bread-and-butter, debit and credit card solutions and into a “broader set of money-movement services,” as McInerney described it.

See:  Visa Makes Its Second Investment Into a Crypto Startup

While Visa may have 3.4 billion debit card holders globally, the acquisition of Plaid—a company that holds the keys to countless fintech services that promise to increasingly shift online the way that people move and spend their money—provides the credit card giant with access to “new products and services in a higher-growth market than we are in today,” McInerney said.

According to EY, 75% of the global consumers accessed a fintech application for money transfers and payments last year, compared to only 18% in 2015. “It’s something that positions Visa for the next decade and beyond,” McInerney added.

Continue to the full article --> here

View presentation summary deck of Visa's acquisition of Plaid --> here

 


NCFA Jan 2018 resize - With Plaid Acquisition, Visa Makes a Big Play for the ‘Plumbing’ That Connects the Fintech World The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

Latest news - With Plaid Acquisition, Visa Makes a Big Play for the ‘Plumbing’ That Connects the Fintech WorldFF Logo 400 v3 - With Plaid Acquisition, Visa Makes a Big Play for the ‘Plumbing’ That Connects the Fintech Worldcommunity social impact - With Plaid Acquisition, Visa Makes a Big Play for the ‘Plumbing’ That Connects the Fintech World

CONGRATULATIONS TO THE 2020 FINTECH DRAFT PITCHING AND DEMO COMPANY WINNERS!



FFCON20 Pitching and Demo Winners - With Plaid Acquisition, Visa Makes a Big Play for the ‘Plumbing’ That Connects the Fintech World



NCFA COVID 19 letter to government to support Fintechs and SMEs - With Plaid Acquisition, Visa Makes a Big Play for the ‘Plumbing’ That Connects the Fintech World

NCFA Newsletter subscribe600 - With Plaid Acquisition, Visa Makes a Big Play for the ‘Plumbing’ That Connects the Fintech World