Plaid & Visa broke up before getting together

If you happen to not live on fintech twitter like the majority of your fellow citizens, you might have missed the news of “mutual agreement to terminate the merger between Visa and Plaid”.

Plaid was a blockbuster M&A event beginning of last year (LOL 2021) and a precursor to the unprecedented growth and craziness we have seen so far in the world of financial services.

Fintech twitter unsurprisingly lit up with takes. I wanted to curate some takes and ask for more takes!

Here’s what people sent me :

Jayni Shah, an early stage fintech investor : Covid has accelerated Fintech adoption by 10+ years. Plaid is arguably one of the most crucial infrastructure layers underpinning a lot of this digital transformation. I think opportunity ahead of Plaid in Jan 2021 is very different than the opportunity same time last year. It’s bigger, bolder and and worth a lot more than $5B. Plaid will accrue a lot more value as a stand-alone entity in the public markets than it ever would as a subsidiary of an incumbent that will slow it down. In fact, I think Plaid will eat the card networks’ lunch as payments become less card-centric in a post-Covid world. With banks and FIs quickly modernizing and non-Fintechs developing Fintech capabilities, my guess is that Plaid has probably achieved just a fraction of the market share they could be going after. There are also a number of opportunities outside of their core product— such as payroll data — that will help them develop a more comprehensive view of consumers’ financial lives and unlock even more value for the company. I know there’s no such thing as “winning” a breakup. But if you’re keeping score, in the case of the Visa/ Plaid failed relationship, I’m pretty sure Plaid’s the winner

Jeffrey Reitman, Partner at Canapi : Even though many current and former employees will have to wait a bit longer for their expected liquidity events, I think plaid will command a much higher valuation in this market. Maybe even a multiple higher than the $5B price. They will certainly have their pick of any of the major exit options: SPAC, IPO, or other M&A.

Anonymous early stage fintech founder : Their internal momentum on innovation and new product development was almost at a standstill, while they were instructed to work independent of VISA, they still had to get everything approved by VISA. Lot of internal chatter was around how they’d maintain momentum once officially inside. Their whole stepping into Plaid for Payroll requires every new customer be vetted and approved by VISA on the contract level...which makes it incredibly difficult to test and validate net new anything. From a speed/velocity perspective; great news. From an internal moral standpoint...you had a lot of tenured folks who had already given notice and whose last days were set around the closing date. Worth noting most employees were originally told it would close by first week in October, then pushed to right before Thanksgiving.

Pranavi Cheemakurti, Associate at Acceleprise : I know literally everyone is saying that Plaid is going to SPAC soon so my lukewarm take in comparison to that is that they're going to stay private longer like Stripe, raise a substantial growth round to fuel some M&A activity and build a fintech API ecosystem and go public after they get to a $30B valuation

Anonymous fintech lead at a hedge fund: Plaid won’t touch payments except for maybe to help fund accounts or payout loans with ACH or RTP. Wont touch traditional commerce or e-commerce. Likely never planned to in the first place. Consumers don’t want to (and probably never will) pay for things with ACH vs debit or credit

Jillian Williams, Principal at Anthemis Group : I think it’s a blessing in disguise for Plaid. After all the up rounds and money pouring into fintech infrastratuce in 2020, 5.3bn seems a bit cheap for a company like plaid. I think there can be a lot of upside left for the team (and VCS) and clear paths to a public exit. Plus, by not being acquired by a large incumbent they will be able to continue to innovate more rather than be seen as a stale incumbent by newer startups.

Alex Wilhelm, Senior Editor at TechCrunch : Investors in Plaid were quick to point out around the time of the acquisition that the company was a strong operating entity, and could have eventually gone public if I recall correctly. So this deal termination, provided that Plaid didn't lose product momentum while in M&A limbo should mean that it is still in good shape. And given that we know that fintech had a boom in 2020, Plaid should have done very well. So, I bet that Plaid can now exit for a multiple of the Visa price, making more money for its already wealthy backers. Zach seems nice fwiw.

Jason Mikula, Managing Director at 312 Global Strategies : Maybe it’s like if Facebook and been blocked from buying WhatsApp (or Instagram), and we’ll see innovation & competition benefits that accrue to customers that wouldn’t otherwise.

Justin M. Overdorff, ex lead of Investments & M&A at Stripe : Plaid is in a materially stronger place today than 1 year ago. If I was Plaid, I would be excited because at this point a $5B deal feels like a steal for $V.

Alex Johnson, Director of Portfolio Marketing at FICO :  Biggest opportunity for Plaid (IMO) after the acquisition falls through will be building out the plumbing to better facilitate collaboration between fintech companies and merchants. The success of Affirm with Peloton (and others) is going to inspire a lot more innovation in the merchant financing space. Plaid can sell a lot of shovels there.

Anonymous investor at a well known growth fund : I’d put in a TS for plaid today at $8B if it were up to me.

Anonymous : 5B was a steal for a company that has the potential to be worth 100B+. If ACH and B2B are Visa’s long term game ( which it should since the volume makes cards look tiny) plaid was the best foot in the door. Now that plaid is free to develop competing payment flows it will do so. However, just because they have the ability to, doesn’t mean they’ll be able to. Setting up these flows take years, resources and legislative work. The most clear example to show the potential force of plaid is to look at ACH/Wire volume in the U.S., it is truly amazing to see people have takes on this but not know how much money is flowing through those networks.

Francisco Javier Arceo, Founder of Unidos : It is nearly impossible for technology teams to make changes *quickly* in large financial enterprises. Plaid delivers fast and high quality tech, the breakup empowers them to continue doing so.

Mary Ann Azevedo, Managing Editor at FinLedger : I'd say this is really not a surprise after all that came out toward the end of last year about Plaid's plans for a debit service that would likely be in direct competition with Visa. I remember the DOJ said: in its lawsuit: “Visa seeks to buy Plaid—as its CEO said—as an ‘insurance policy’ to neutralize a ‘threat to our important US debit business." In the end, this is probably the best outcome for both parties, who it seems plan to still work together.

Natasha Mascarenhas, Reporter at TechCrunch : It’s so hot right now that I don’t think fintech startups or fintech vcs will have a super negative reaction to the news. like, if covid didn’t happen and didn’t completely accelerate the need for a fintech revolution then maybe. But it feels like the boom, at least in current moment, is too big to be tied to a single failed deal. The SPAC joke is overdone but does speak to optimism in market and optionality of exits in startups right now. I feel like the failed billie deal after the failed harry’s deal hurt d2c a lot more than plaid visa fall apart hurt fintech

Parthi Loganathan, Founder of Letterdrop : Plaid can either expand geographically or go into other verticals. Geographical expansion makes more sense. YC has a new Plaid for {country} every batch. If any of them get over the hurdle of integrating with local banking infrastructure, it's cheaper for Plaid to just buy them rather than rebuild and negotiate these themselves.

Some takes from Twitter :