Plaid: Visa’s pricey bet on the future of finance

Visa has paid $5.3bn for fintech start-up Plaid, following on from last year’s purchase of cross-border payments company Earthport.

Visa has bought fintech start-up Plaid for a “whopping” $5.3bn, says Rey Mashayekhi in Fortune Magazine. Plaid has become an “indispensable piece of the fintech ecosystem”, helping connect one in four people with a US bank account to thousands of apps and services, including Venmo and Robinhood. 

Visa hopes that Plaid’s technology will help flesh out its “non-card and [real-time] payments” services and this acquisition follows on from last year’s purchase of cross-border payments company Earthport.

Visa’s bet on Plaid is definitely “expensive”, but expensive “doesn’t mean wrong”, says Telis Demos in The Wall Street Journal. After all, while the use of credit and debit cards is growing, there is also a future “that doesn’t look so card-centric”, or in which “non-card payments grow even faster, especially globally”. 

In any case, buying Plaid can help Visa “push its existing payment tools to more customers, but also tap into growth of other networks and movements of money”.

Visa may be right to be worried by the fact that direct transfers between bank accounts using fintech apps “can bypass the traditional payments infrastructure and might over time pose a threat to Visa”, says Liam Proud on Breakingviews. 

Still, its decision to pay billions for a firm that will only boost revenue by $100m a year suggests that “profiting from the fears of rich behemoths can be good business”. The big winners from all of this are likely to be Plaid’s rivals, such as PayPal’s Tink, who can now expect to command a “high valuation” from other firms worried about the future of finance.

Recommended

Upcoming IPOs in 2022: which companies are planning to list this year?
UK stockmarkets

Upcoming IPOs in 2022: which companies are planning to list this year?

Rupert Hargreaves explains what an IPO is, how public and private companies differ, and picks out some of the more notable companies set to list on th…
12 Sep 2022
How to play the Netflix share price
Trading

How to play the Netflix share price

Netflix still has plenty of scope for growth, says Matthew Partridge, and the shares are reasonably priced. Here's how to play the Netflix share price…
30 Aug 2022
Are stocks back in a bull market or is this just a bear market rally?
Stockmarkets

Are stocks back in a bull market or is this just a bear market rally?

The S&P 500 index gained 17% between its June lows and 16 August, while the Nasdaq Composite rose more than 20%. So are stocks back in a bull market o…
24 Aug 2022
Alibaba may be booted off NYSE
US stockmarkets

Alibaba may be booted off NYSE

Shares in Chinese e-commerce giant Alibaba Group fell by 4% last week amid fears that it could be kicked off the New York Stock Exchange.
3 Aug 2022

Most Popular

Paypal, bitcoin, and the weaponisation of money
Bitcoin & crypto

Paypal, bitcoin, and the weaponisation of money

Recent events have shown how both business and governments can “weaponise” money and shut down dissent. What to do? Buy bitcoin, says Dominic Frisby.
22 Sep 2022
Why we should abolish stamp duty – the worst tax in Britain
Tax

Why we should abolish stamp duty – the worst tax in Britain

Stamp duty is Britain’s most horrible tax. We should forget cutting it and abolish it altogether, says Merryn Somerset Webb.
22 Sep 2022
What we know and what to expect from Kwasi Kwarteng's mini-Budget
Budget

What we know and what to expect from Kwasi Kwarteng's mini-Budget

New chancellor Kwasi Kwarteng is to deliver a “mini-Budget”. Nicole García Mérida explains what we can expect to see.
22 Sep 2022