Visa closes in on a deal to buy fintech Plaid

Visa closes in on a deal to buy fintech Plaid

Visa closes in on a deal to buy fintech Plaid

Visa Inc said on Monday it agreed to buy privately held software startup Plaid Inc in a $5.3 billion deal that will boost the payments giant's access to the booming financial technology space. Bankers refer to companies like Plaid as "the plumbing" behind how these apps work.

Plaid focuses on enabling consumers and businesses to interact with their bank accounts, check balances, and make payments through financial technology applications.

The takeover of the fintech darling will give Visa a great opportunity to "accelerate" the company's business beyond cards, according to its CEO Al Kelly.

The acquisition values Plaid exactly two times higher than the $2.65 billion it was valued at after its December 2018 funding round, where it raised $250 million. The $% billion price tag paid by Visa indicates a competitive bidding process to take over the company. So Visa must be pretty happy with how the startup has developed since then.

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.

Visa said it will fund the deal using cash on hand as well as debt.

Plaid allows consumers to link their bank accounts to financial services apps like Venmo, PayPal, Betterment and Transferwise. The acquisition would not impact upon Visa's previously announced stock buyback or dividend plans.

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