As a part of the company’s efforts to tap into consumers’ growing use of fin-tech services, Visa has announced that it is acquiring Plaid for $5.3 billion. This is yet another move from the card giant to diversify its business as it prepares for the possibility that non-card payment forms could one day replace cards.
Plaid is known for developing financial services APIs but instead of facilitating payments, it helps developers share banking and other financial information more easily. It’s the kind of service that makes sense for a company like Visa.
It has several high-profile customers, including the likes of peer-to-peer payment app from PayPal — Venmo, mobile investing app Robinhood and cryptocurrency exchanges Coinbase and Gemini.
Looking at the numbers, Visa is paying a significant premium over Plaid’s valuation of roughly $2.65 billion in a 2018 funding round. However, it is a major win for the startup’s investors who put a combined $353.3 million over the years. The last funding round Plaid was in late 2018 when it raised $250 million, in which Visa and Mastercard participated.
In a call with investors, Visa CEO Al Kelly said Plaid has seen a compound annual growth rate of roughly 100 percent since 2015. He also added that the deal was a “long-term” play and would position Visa for the next decade.
Plaid was founded in 2012 by Zach Perret and William Hockey. The company says it integrates with more than 11,000 banks and connects to more than 20 million consumer accounts. While it does not give specific numbers or a full list of companies, Plaid said its customer base doubled from 2017 to 2018 and has expanded to the U.K. and Canada.