Global payments tech company, Visa has agreed to acquire Paid, a fintech company, for $5.3billion a deal that will boost the payment giant’s access to the booming fintech space.
This new deal is coming months after Visa paid $200 million for 20percent stake in Interswitch, Nigeria’s largest electronic payments company.
Plaid, founded in 2013 and currently connects with over 11,000 financial institutions across the United States, Canada and Europe,
With this acquisition, Plaid will be able to use the acquisition to leverage Visa’s global brand in expanding its own business. It provides “aggregator” software that allows fintechs and other financial services companies to access clients’ bank account information. Its clients include the financial planning apps Mint and Acorns and the money transfer app Venm.
The aggregators have long had frosty relationships with banks, which have expressed reservations about the aggregators’ ability to protect customers’ personal information.
Of particular concern is “screen scraping,” where consumers provide their bank login details to third-party fintechs, rather than using secure APIs (application programming interfaces) that can transmit data from the bank without the release of passwords.
JPMorgan Chase recently said it would ban fintechs from using its customers’ passwords to access their accounts. API connections require banks to come to explicit agreements with aggregators and fintechs, which screen-scraping does not.
Visa makes almost entirely all of its money from swipe fees it earns from merchants whenever its cards are accepted.
Visa expects the acquisition, which will close in three to six months pending regulatory approval, to increase the company’s revenue and profits starting next fiscal year.
The San Francisco company was already an investor in Plaid, and so is Visa’s biggest competitor, Mastercard. Both companies invested in Plaid in 2019.