Visa Inc. is paying $5.3 billion to acquire financial data aggregation company Plaid.
Plaid’s technology is what allows consumers to connect popular fintech apps with their traditional bank accounts. Whenever a person enters their online bank account username and password, Plaid checks the credentials with the financial institution. If the information is accurate, Plaid passes the banking information back to the app.
According to Visa, one in four consumers with a U.S. bank account have used Plaid to connect to 2,600 fintech apps.
Plaid powers data aggregation at some of the most popular fintech startups, and in May it spent $200 million to acquire Quovo, a rival data aggregation fintech that specialized in wealth management and brokerage. The Quovo acquisition brought along traditional firms like Janney Montgomery Scott, robo-advisers including Betterment and Acorns, and even adviser-facing vendors like Advizr and Advicent NaviPlan.
Visa chairman and CEO Al Kelly said the Plaid acquisition will combine with the fintech efforts fintech already has underway to position the company to deliver more value to financial institutions and consumers. Plaid opens new market opportunities for Visa, and Mr. Kelly expects the combination of the two companies to create enhanced payment capabilities.
The acquisition of a fintech company will also help Visa work more closely with fintech developers, he added.
“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,” Mr. Kelly said in a statement. “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.”
According to a blog post by Plaid CEO and co-founder Zach Perret, Visa wants Plaid to continue operating as an independent business unit.
“They share our vision for the future of financial services and have deep respect for the developer community we support,” Mr. Perret said. “We’ll be able to lean on their brand, resources, and international footprint if doing so can benefit our customers, our partners, and the markets we serve.”
Visa will fund the transaction with cash on hand and debt. The deal is expected to close in the next three to six months.
Wealth Consulting Group, Coastline and Maridea report fresh capital, acquisitions and asset growth as advisor M&A keeps climbing
Carson Group's Dani Fava, Jason Pereira of Woodgate Financial, and Sally George of Convergency Partners led the raise as the growth-tech startup builds out its AI platform and leadership bench.
New teams from William Blair, Ameriprise and UBS bring more than $560 million in combined client assets to the firm's employee and independent channels.
Regulators this year approved UBS Bank USA’s conversion to a nationally chartered bank.
How a subprime lender’s car-loan bonds allegedly unraveled before bankruptcy.
Northern Trust’s Ken Lassner shows advisors how to convert volatility into after-tax portfolio gains
Dan Biagini of American Equity says the steady decline of pensions, longer lifespans and a reset in interest rates are rewriting how advisors build retirement income
