The UK Competition and Markets Authority has highlighted the takeover of the fintech start-up Plaid by Visa in green after a phase 1 review.
According to an announcement made on August 24th The CMA investigated various ways the deal could harm competition, but ultimately found no evidence that this outcome was likely..
Plaid provides a platform for applications to connect to a user’s bank accounts. In the UK, the company offers Payment Initiation Services (PIS), which allows direct payments to be made in real time through merchant websites without the use of credit or debit cards.
The CMA focused on whether this deal could impact the UK consumer-to-business electronic payments sector, where both Visa and Plaid are active.
It turned out that Plaid would likely have become a growing competitive threat to Visa in the future. However, there are already several similar or stronger PIS providers in the UK, so Visa would continue to face competition in this sector after the acquisition.
The CMA also looked at whether Visa could oust Plaid’s competitors from the market by leveraging its strong position to provide a combination of a card and PIS-based payment system.
Again, it turned out not to be the case, as consumers in general are happy to use multiple payment option providers and other PIS providers may be able to form similar partnerships.
As Cointelegraph reported, Plaid has been plagued by a number of class action lawsuits alleging breach of data protection laws, although the company denies the allegations.