Visa, an American financial services company has made an official announcement that it is going to buy Plaid for $5.3 billion. However, trade analysts feel that the deal has been made to gain financial data of Plaid and that includes billions of transactions related to data protected by the California’s new privacy law.
Thankfully, as the government may monitor and block such deals that cause hindrance to the prevailing privacy laws, the US Department of Justice sued the deal to protect the data trove that has been gained by Visa through Plaid.
It is already a known fact that Visa already controls nearly 60% of digital card transactions across the world earning $2 billion approximately through it. However, this profit share received a dent when payment apps like Venmo attracted customers with contactless transactions that are powered by the technology supplied by Plaid.
Thus, Visa wants to gain Plaid to stop the payments made by the apps to establish a Monopoly- a similar move that Google and Facebook tried to do in Australia with their respective products and services, but received a strong backlash from the government.
A big fish eating a small fish is witnessed in all industries and the same has been witnessed in this deal as well where Visa dominance to occupy the top position in market share is clearly evident.
Note 1- Plaid has vast amounts of information stored on its servers as it is a direct data aggregator and this includes details regarding merchants and the competitors of Visa.
Note 2- After the deal announcement, two lawsuits were filed against the Plaid & Visa deal, as the former is facing an allegation that it exploits its users in submitting their bank passwords- that is dead against the prevailing anti-phishing law of California.
