UK Regulator Approve VISA’s Plaid Acquisition Author: Jimmy Aki Last Updated: 25 August 2020 Global payment processor VISA is about to get significantly bigger, as the firm’s latest venture recently got approval from regulators in the United Kingdom. The U.K.’s Competition and Markets Authority (CMA) announced that it had greenlit VISA’s acquisition of FinTech platform Plaid. The approval came following a phase 1 review. No Way to Hurt Themselves or Competitors Plaid provides a platform for users to connect bank accounts to different apps. It also offers payment initiation services in the U.K., which will allow users to make real-time payments via merchant websites without the use of debit or credit cards. The VISA acquisition happened earlier this year. In a press release, the payment processor explained that FinTech applications have become necessary as 75% of the world’s internet-enabled consumers used FinTech applications to make fund transfers. The acquisition was for a $5.3 billion price tag. However, the CMA had some questions about the viability of the move. In its review, the CMA focused on whether the VISA acquisition will affect the U.K.’s customer-to-business electronic payments sector. Both VISA and Plaid are players in the industry, and the CMA feared that VISA was purchasing a company that would have constituted an increasingly competitive threat to Plaid in the future. The CMA also considered whether VISA would leverage Plaid’s strong position and card system to drive other companies out of the payments system. Eventually, the agency cleared the process to go on. As the CMA explained, it found that there are already several companies that play in the sector. So, VISA should have enough competition. On the second concern, it explained that consumers have shown a proclivity to having multiple payment providers. Since other companies can forge partnerships of their own too, it didn’t quite matter. Plaid’s Legal Baggage Now that the acquisition looks set to proceed, VISA will now have to deal with some baggage that Plaid has with it. The FinTech company is currently facing two lawsuits that have called its data handling practices into question. The first lawsuit was filed in June, and it alleged that Plaid had conducted “data plumbing.” As the case file explained, the company had collected millions of user records from services like Stripe, Square’s Cash App, and Venmo. The complaint contended that each of Plaid’s violations had caused damages of over $5,000 per year for every class member. However, it didn’t specify how much compensation Plaid was on the hook for. A second suit came up last month. More detailed, it accused Plaid of collecting information on 200 million distinct financial accounts across the services mentioned above and even more. It added that the company obtained customer information unrelated to their use of the apps in question and used them solely for its benefit. It also roped VISA into the mix, saying: “Plaid exploits its ill-gotten information in a variety of ways, including marketing the data to its app customers, analyzing the data to derive insights into consumer behavior, and, most recently, selling its collection of data to Visa as part of a multi-billion dollar acquisition.” A spokesperson for Plaid has called the claims baseless. However, the resolution of the case remains to be seen.