Why Visa acquired 6-year fintech startup

VISA, a global payment service company, announced that it will acquire Plaid, a fintech startup that develops APIs that connect bank accounts and applications, for $5.3 billion and KRW 6 trillion.

Plaid is a 6-7-year-old company located in San Francisco, USA. You might wonder if this company really has such value. However, in reality, major US digital bank Chime, mobile investment company Acorns, fee-free stock trading service Robinhood, cryptocurrency exchange Coinbase, financial management service Clarity Money, etc. The application is in use.

Plaid acts as a link between fintech applications and existing bank accounts. Visa plans to develop this into a global business unit. The strength of Plaid is that it can send money quickly without authentication for microtransmission. Venmo, an individual remittance program under PayPal, has also teamed up with Plaid to enable real-time balance checks to realize instant remittances.

Of course, banks also show rejection. Capital One blocked access and PNC Bank blocked Plaid because of the risk because the back kept storing information in the data collector, and immediately after blocking the Venmo account, Benmo users could not use the account.

Diesel (Zelle) was recommended by PNC Bank instead. Diesel is a service that connects accounts and makes direct P2P remittances. Since the launch of the service in July 2016, it has rapidly increased the number of partners and users based on the reliability of its banking application. Of course, you need to be careful when sending money to strangers. If you write down the wrong phone number or e-mail address and send it to someone else, you are all responsible.

Anyway, large acquisitions are in full swing in the fintech industry. According to data released by Visa, a whopping 7,688 investments were made over five years, and the amount of procurement reached $120 billion. The proportion of fintech users among the global Internet purchaser population is also increasing. In this regard, it may be a smart strategy for Visa to take over a company that has a dominant position in APIs. Related information can be found here .