- Plaid, which is a fintech firm designed to enable more integrated online money transfer, has been aqcuired by Visa for $5.3 billion
- This comes after Visa bought Earthport, a cross border payments company – although for much less money
- “We are increasingly trying to move from being strictly focused on payments to being focused on the movement of funds for any purpose around the world”, said senior Visa figure
Global financial services organisation, Visa, has purchased a payments firm, which is just seven years old.
Visa has spent $5.3bn buying Plaid, a company which was set up in 2013 and allows customers to link their bank accounts to a whole range of apps which help people to make online money transfers.
These apps including everything from TransferWise to Venmo.
The size of the acquisition fee, however, came as something of a surprise.
Plaid was valued at a much lower amount the last time it had a venture funding round, with the figure closer to $2bn.
This occurred just over a year ago – suggesting that its value has since risen significantly, and enhancing the perception that fintechs are experiencing a major value rise across the board as firms like Visa take interest.
It is believed that most of the acquisition fee will be paid in cash consideration, with around $4.9bn being spent this way.
A further $400m will be offered in retention equity, which will go to major figures at Plaid.
This comes after Visa also bought a firm called Earthport, which offers cross border payments services to various types of institutions.
This occurred last year and saw $250m paid.
According to Alfred Kelly, who is the chief executive and chair of Visa, the statistics of fintech apps bear out the perception that they are highly popular – even on a global basis.
“In 2019, 75% of the world’s internet users used at least one fintech application”, he said.
“We are increasingly trying to move from being strictly focused on payments to being focused on the movement of funds for any purpose around the world”, he added.
He described Plaid as offering something which Visa was currently unable to.
“Plaid is bringing a new network and a new network capability in the form of connectivity that we at Visa do not have”, he explained.
Another key Visa leader, the firm’s chief financial officer Vasant Prabhu, added that fintechs were seeing very high levels of growth.
“Fintechs are growing at many multiples of the rate of growth in Visa’s core C2B payments business”, he said.
“In addition, by integrating payments with Plaid, we can accelerate Visa’s network of networks money movement strategy, which is underpinned by the Visa Direct, Earthport and our B2B initiatives”, he added.
To stay on top of what key players in this sector, such as Visa, are up to, why not head over to our news section and bookmark it in your favourites?
