Visa Inc. (NYSE: V) has announced that it is purchasing financial technology company Plaid for $5.3 billion. Visa expects the acquisition to close in three to six months pending regulatory approval. Goldman Sachs was the exclusive advisor on the deal, according to a person familiar with the negotiations.
Companies like Plaid, which allow consumers to link their bank accounts to financial services apps, have become more important as more Americans use mobile wallets or send money to friends, families and businesses. Visa CEO Al Kelly said, “This fits well, strategically. We’re excited about new businesses and the ability for this to accelerate our revenue growth over time.”
This is Visa’s first big push into a product that isn’t just credit and debits cards. The San Francisco company was already an investor in Plaid before the acquisition announcement. Plaid was valued at roughly $2.65 billion in a 2018 funding round.
Plaid has steadily grown with its list of customers since it launched in 2013. High-profile Plaid customers include popular peer-to-peer payment app Venmo, mobile investing app Robinhood, and cryptocurrency exchanges Coinbase and Gemini. Plaid said its customer base doubled from 2017 to 2018 and has expanded to the U.K. and Canada.
The company says it integrates with more than 11,000 banks and connects to more than 200 million consumer accounts. Visa estimates that 1 in every 4 Americans who have a bank account link their bank accounts with other money transfer apps using the technologies of Plaid.
Visa is the world’s largest payment processing company. It makes almost entirely all of its money from swipe fees it earns from merchants whenever its cards are accepted. Visa said the deal for Plaid has the potential to add as much as 100 basis points to the company’s net revenue growth by 2021.