Visa swooped with its bid to buy Plaid, a US-based tech provider that connects new digital apps to existing bank accounts, in January.
The British competition authority began a probe in June, centring its investigation on the market for “payment initiation services” in the UK — a service offered by Plaid, which allows consumers to make payments from an app or website, providing an alternative to paying online using a credit or debit card.
UK retailers expressed concern that Visa’s proposed acquisition would thus take out one of its major rivals and reduce competition. Card costs set retailers back by £1.3bn in 2018, up £70m from the previous year.
But other fintechs, who were canvassed by the CMA, declared themselves unconcerned, and their feedback has helped convince the authority to let the deal through, it said.
In a market statement on 24 August, the CMA said that while the market for payment initiation services, or PIS, is at a “nascent stage” in the UK, “Plaid would have been an increasing competitive threat to Visa in future”.
But it added: “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 said it had looked at whether a combined Visa-Plaid could drive Plaid’s fintech rivals out of the market with a combined offering of card-based services and PIS services. The authority decided this could happen, because “customers often use multiple suppliers for their payment options” and other PIS fintechs could equally enter into tie-ups of their own.
Speaking on 28 July at Visa’s financial results, chair and CEO Alfred Kelly told analysts that the firm was expecting the Plaid acquisition deal to close “by the end of the calendar year”.
He said: “We are doing everything we can to comply with any requests from the regulators that are looking at it. We are as excited about the Plaid acquisition today as we were back in January when we made the announcement, and we really believe we got the asset we wanted.”
Source: Financial News
