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Visa’s Planned $5.3B Purchase of Fintech Firm Plaid Challenged by US DOJ

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The United States Department of Justice (DOJ) filed a lawsuit Thursday to stop Visa’s planned $5.3 billion acquisition of fintech firm Plaid, saying it violates antitrust laws and would eliminate competition in the online debit market. 

Filed in a Northern California federal court, the lawsuit described Visa as a “monopolist” in online debit transactions and noted its proposed acquisition of Plaid violates both Section 2 of the Sherman Act and Section 7 of the Clayton Act.  

According to the DOJ’s complaint, Visa currently operates the largest card network in the United States and has a 70% market share of all online debit transactions. Plaid, on the other hand, provides the technological infrastructure for multiple fintech platforms such as PayPal’s Venmo and crypto exchange Coinbase. 

Plaid has also been working with at least two decentralized finance (DeFi) startups, Dharma and Teller Finance. 

The complaint said that in making its case before Visa’s board of directors to buy Plaid, Visa’s senior leadership estimated a “potential downside risk” of $300 million to $500 million “in our U.S. debit business” by 2024 should Plaid fall into the hands of a rival. According to the Justice Department, Visa knew losing Plaid could create an “[e]xistential risk to our U.S. debit business” and that “Visa may be forced to accept lower margins or not have a competitive offering.”

While the anti-trust lawsuit acknowledged Plaid’s current technology doesn’t directly compete with Visa, DOJ noted Plaid’s online debit service could become a significant competitor to Visa and Mastercard. 

“If allowed to proceed, the acquisition would deprive American merchants and consumers of this innovative alternative,” Assistant Attorney General Makan Delrahim of the Justice Department’s Antitrust Division said in a statement.  

Plaid declined to comment but a Visa spokesperson told The Wall Street Journal that the lawsuit is “legally flawed and contradicted by the facts. … The combination of Visa and Plaid will deliver substantial benefits for consumers seeking access to a broader range of financial-related services, and Visa intends to defend the transaction vigorously.”



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Signature Bank Adds $2.5B in Non-Interest Bearing Deposits in Q4

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Cryptocurrency firms are often a rich source of low-cost deposits for the few banks that openly serve the sector. As such, analysts have paid close attention to non-interest bearing deposit growth at Signature. These deposits represent nearly 30% of total deposits at the bank.

Total deposits increased at the bank quarter over quarter by $8.98 billion, with money market deposits representing the lion’s share.

Signature’s average cost of deposits and average cost of funds for the fourth quarter of 2020 decreased by 66 and 69 basis points to 0.42% and 0.57%, respectively.



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Chinese City Plans Third Digital Yuan Pilot, Giving Away $3M in Prize Draw

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Lottery entrants can apply to win 200 digital yuan each.



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Microsoft, India’s Tanla Launch Encrypted Messaging Infrastructure Built With Blockchain

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The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.



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