Visa Buy of Plaid Payments App, Is Given Green Light by CMA

Here’s one we missed from last week, interesting decision by the CMA – this is the statement from the UK GOV website;

The Competition and Markets Authority has found in favour of Visa, as it swoops on fintech start-up Plaid Inc. (Plaid), which is a US-based technology platform provider that builds connectivity infrastructure, which enables digital apps to connect with a user’s bank accounts.

In the UK, Plaid offers payment initiation services (PIS). These enable a consumer to make real-time account-to-account payments directly from a merchant’s app or website, providing an alternative to paying online using a credit card or debit card.

Visa announced in January 2020 that it had agreed to buy Plaid in a deal worth $5.3 billion. While Plaid is a relatively small player in the UK today, the CMA carefully considered its prospects for future growth within the payment services sector.

The CMA found that Plaid would have been an increasing competitive threat to Visa in future, but that it is only one of a number of PIS providers already active in the UK, with several of these, such as TrueLayer, Tink, Token.io and Yapily, already possessing similar, or stronger, competitive capabilities than Plaid.

On this basis, the CMA concluded that in the UK Visa would continue to face sufficient competition from PIS-enabled payments, and other types of services enabling consumer-to-business payments, after the merger.

The CMA also considered whether Visa would be able to leverage its strong position in card-based payments to drive Plaid’s rivals out of the market by supplying a combined offering for card-based payments and PIS-enabled payments.

Here, the CMA concluded that the combined Visa-Plaid business would not have the ability to push other providers out of the market, principally because customers often use multiple suppliers for their payment options. Rival providers of PIS would also be able to enter into arrangements, such as mergers or partnerships, with other payments providers to acquire customers.

As part of its assessment, the CMA examined a wide range of evidence, including thousands of internal documents detailing the companies’ strategic plans, and submissions from numerous customers, competitors and merchants. To assist with its analysis, it also made use of the CMA’s existing expertise from the Retail Banking Market Investigation and the implementation of open banking in the UK.

For more information, including a summary of the CMA’s decision, please visit the Visa International Service Association / Plaid Inc. merger inquiry page.