In the near future, the Department of Justice (DOJ) could determine if it will sue to prevent Visa’s purchase of Plaid Inc., which offers the technology backbone supporting a bevy of financial apps.
The DOJ has been getting ready for possible litigation, the news outlet said, citing some of the unnamed sources. However, a final course of action has not been determined.
The department is worried that the arrangement could hamper burgeoning competition in the payments arena after it spent a good portion of the year looking into it, the WSJ reported.
Plaid develops application programming interfaces (APIs) that make it simpler for consumers to share their information, such as bank account credentials, with third parties through one digital touchpoint.
“Plaid opens up new market opportunities by significantly expanding Visa’s network capabilities,” Visa CEO Al Kelly told investors on a conference call following the deal’s announcement, noting that Plaid provides “a terrific platform for extending” Visa’s integrated payment solutions and value-added services.
The watchdog said it examined a wide array of evidence like input from different merchants, customers and competitors in addition to internal documents.
The probe was primarily geared toward how the deal could affect rivalry in the consumer-to-business (C2B) digital payments industry in which Visa through card-based payments and Plaid through payment initiation services (PIS) are active.
“Plaid would have been an increasing competitive threat to Visa in future, but that it is only one of a number of PIS providers already active in the U.K.,” the watchdog found.
It named TrueLayer, Yapily, Tink and Token.io as other companies “already possessing similar, or stronger, competitive capabilities than Plaid.”