Visa’s $5.3B acquisition of Plaid is facing scrutiny from the U.S. Department of Justice (DOJ), which filed a petition with a court demanding answers to a series of questions. The DOJ will assess whether the acquisition violates antitrust law.

Why should we care?
At issue is whether the transaction would limit competition, and in particular whether Visa — the dominant provider of debit services in the U.S. — would create or maintain a monopoly, the Wall Street Journal reported. Through Plaid, Visa would gain access to 200 million consumer bank accounts and 2,600 third-party financial apps, raising concerns about its control over the sector. “If the DOJ had recognized fintech sooner, they might not have missed Plaid and Quovo’s merger in January 2019 that led to Plaid’s bank coverage and dominance in the data aggregation market,” said Lindsay Davis, fintech analyst and director of consultancy Caliber Intelligence. “The deals are likely to go through if they are viewed as future proofing strategies. If regulators want to break up Plaid’s near monopoly, regulators need to bolster competition and could enact a US Open Banking framework like the EU, which has led to multiple infrastructure players — including Plaid and Quovo — with differentiated business models.”