{"id":8158,"date":"2020-02-17T21:20:28","date_gmt":"2020-02-17T19:20:28","guid":{"rendered":"https:\/\/forklog.media\/?p=8158"},"modified":"2020-02-18T00:59:47","modified_gmt":"2020-02-17T22:59:47","slug":"visa-acquires-payment-startups-what-could-it-mean-for-crypto","status":"publish","type":"post","link":"https:\/\/forklog.com\/en\/visa-acquires-payment-startups-what-could-it-mean-for-crypto\/","title":{"rendered":"Visa Acquires Payment Startups: What Could It Mean for Crypto?"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">One of the high-profile deals in the financial market in January 2020 was the purchase of the Plaid fintech startup for $5.3 billion by the Visa payment system.\u00a0<\/span><\/p>\n<p><!--more--><\/p>\n<p><span style=\"font-weight: 400;\">A slew of rumors and speculations about the true motivation behind this purchase instantly spawned conspiracy theories. Some vigilant commentators even suggested that Visa intended to devour every fintech startup in order to protect itself from the competition. This sentiment was aptly summed up by Morgan Creek Digitial co-founder Anthony Pompiliano.<\/span><\/p>\n<blockquote class=\"twitter-tweet\" data-width=\"500\" data-dnt=\"true\">\n<p lang=\"en\" dir=\"ltr\">BREAKING: Visa just announced they are buying fintech Plaid for $5.3 billion.<\/p>\n<p>Incumbent financial services companies are going to spend the next 3-5 years buying up various fintech startups.<\/p>\n<p>If they don\u2019t, the startups will put them out of business.<\/p>\n<p>&mdash; Anthony Pompliano \ud83c\udf2a (@APompliano) <a href=\"https:\/\/twitter.com\/APompliano\/status\/1216840640996282368?ref_src=twsrc%5Etfw\">January 13, 2020<\/a><\/p><\/blockquote>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<p><span style=\"font-weight: 400;\">We dived into the matter to understand whether this is the case and what possible consequences this may have for the fintech industry as a whole.<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">Visa Paid a Premium Price\u00a0<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">The deal was announced on January 14, and its completion is expected within 3-6 months after obtaining the necessary regulatory permits. According to Visa, the acquisition of Plaid will allow it to provide users with advanced payment options and related services for fintech developers.<\/span><\/p>\n<blockquote><p><b><i>\u201cThis acquisition is the natural evolution of Visa&#8217;s 60-year journey from safely and securely connecting buyers and sellers to connecting consumers with digital financial services. The combination of Visa and Plaid will put us at the epicenter of the fintech world, expanding our total addressable market and accelerating our long-term revenue growth trajectory,\u201d <\/i><\/b><i><span style=\"font-weight: 400;\">said Al Kelly, CEO and chairman of Visa, in a <\/span><\/i><a href=\"https:\/\/usa.visa.com\/about-visa\/newsroom\/press-releases.releaseId.16856.html\"><i><span style=\"font-weight: 400;\">press release<\/span><\/i><\/a><i><span style=\"font-weight: 400;\">.<\/span><\/i><\/p><\/blockquote>\n<p><span style=\"font-weight: 400;\">A year ago Plaid was evaluated at $2.65 billion. But Visa paid a whopping $5.3 billion.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">According to Visa\u2019s <\/span><a href=\"https:\/\/s1.q4cdn.com\/050606653\/files\/doc_presentations\/2020\/Visa-Inc.-To-Acquire-Plaid-Presentation.pdf\"><span style=\"font-weight: 400;\">presentation<\/span><\/a><span style=\"font-weight: 400;\">, the acquisition of Plaid will help Visa add 80-100 basis points (less than 1%) to its revenue growth by 2021.\u00a0<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">Plaid Is Huge in the U.S.<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Plaid is essentially a financial data aggregator that connects thousands of banks, financial services, and fintech companies to more than 200 million customer accounts. It aims to provide a streamlined and secure solution that links bank accounts to financial management applications. Plaid software allows reducing the previously lengthy verification process to only a few seconds.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">According to Visa\u2019s presentation, 80% of the largest fintech applications in the USA are connected to the Plaid network. The company is partnered with more than 11,000 banks and financial services companies. Among them are the already mentioned Coinbase and Abra.\u00a0<\/span><\/p>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/forklog.com\/wp-content\/uploads\/plaid-founders.jpg\" alt=\"Plaid co-founders Zach Perret and William Hawkey. In 2015, they were featured in the Forbes 30 Under 30 ranking.\" width=\"1024\" height=\"577\" \/><\/p>\n<p><span style=\"font-size: 10pt;\"><i><span style=\"font-weight: 400;\">Plaid co-founders Zach Perret and William Hawkey. In 2015, they were featured in the Forbes <\/span><\/i><a href=\"https:\/\/www.forbes.com\/30-under-30-2015\/#\/enterprise-tech\"><i><span style=\"font-weight: 400;\">30 Under 30<\/span><\/i><\/a><i><span style=\"font-weight: 400;\"> ranking.<\/span><\/i><\/span><\/p>\n<p><span style=\"font-weight: 400;\">By the time of the deal with Visa, the company already achieved unicorn status, with venture capital investments of <\/span><a href=\"https:\/\/www.crunchbase.com\/organization\/plaid\"><span style=\"font-weight: 400;\">$310 million<\/span><\/a><span style=\"font-weight: 400;\">.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Curiously enough Visa was one of Plaid\u2019s early investors. Other notable organizations that have invested in Plaid include Andreessen Horowitz, American Express, Goldman Sachs, and Citi. Visa&#8217;s direct competitor, MasterCard, also invested in the company.<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">What Are Visa and Mastercard Up To?<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Plaid was not the first Visa\u2019s purchase in the field of fintech. In total Visa invested in almost 50 companies, including those working with cryptocurrencies.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In July 2019, together with Blockchain Capital, Visa spearheaded the $40 million Series B financing round for cryptocurrency custody services provider <\/span><a href=\"https:\/\/twitter.com\/Anchorage\/status\/1148920213351493633\"><span style=\"font-weight: 400;\">Anchorage<\/span><\/a><span style=\"font-weight: 400;\">. For Visa, this was the second time it invested in a cryptocurrency company. The first was the investment in the developer of blockchain solutions for the financial industry <\/span><a href=\"https:\/\/www.forbes.com\/sites\/laurashin\/2015\/09\/09\/visa-citi-nasdaq-invest-30-million-in-blockchain-startup-chain-com\/#72fcf77199c2\"><span style=\"font-weight: 400;\">Chain<\/span><\/a><span style=\"font-weight: 400;\"> in 2015.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">MasterCard had been moving on a parallel course. Back in March 2015, a <\/span><a href=\"https:\/\/www.sec.gov\/Archives\/edgar\/data\/1141391\/000114139115000011\/ma12312014-10xk.htm\"><span style=\"font-weight: 400;\">report<\/span><\/a><span style=\"font-weight: 400;\"> was published in which the term \u201ccryptocurrencies\u201d was used repeatedly and each time in the context of competition. In October of the same year, MasterCard joined the ranks of Digital Currency Group (DCG). DCG notably includes the investment company Grayscale Investments. The value of cryptocurrency assets under its management in 2019 reached almost <\/span><a href=\"https:\/\/grayscale.co\/digital-asset-investment-report-2019-q2\/?utm_medium=social&amp;utm_source=twitter&amp;utm_campaign=2019_q2_investment_report\"><span style=\"font-weight: 400;\">$3 billion<\/span><\/a><span style=\"font-weight: 400;\">.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">MasterCard is also active in obtaining patents in the field of cryptocurrencies and blockchain technology, among which patents for <\/span><a href=\"http:\/\/patft.uspto.gov\/netacgi\/nph-Parser?Sect1=PTO2&amp;Sect2=HITOFF&amp;p=1&amp;u=%2Fnetahtml%2FPTO%2Fsearch-bool.html&amp;r=2&amp;f=G&amp;l=50&amp;co1=OR&amp;d=PTXT&amp;s1=cryptocurrency&amp;s2=blockchain&amp;OS=cryptocurrency+OR+blockchain&amp;RS=cryptocurrency+OR+blockchain\"><span style=\"font-weight: 400;\">multicurrency blockchain system technologies<\/span><\/a><span style=\"font-weight: 400;\"> and a <\/span><a href=\"http:\/\/patft.uspto.gov\/netacgi\/nph-Parser?Sect1=PTO2&amp;Sect2=HITOFF&amp;u=%2Fnetahtml%2FPTO%2Fsearch-adv.htm&amp;r=1&amp;p=1&amp;f=G&amp;l=50&amp;d=PTXT&amp;S1=10,097,344.PN.&amp;OS=pn\/10,097,344&amp;RS=PN\/10,097,344\"><span style=\"font-weight: 400;\">method for accelerated processing of cryptocurrency transactions<\/span><\/a><span style=\"font-weight: 400;\"> can be mentioned.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In February 2019 MasterCard together with Ripple and Barclays became an investor of the <\/span><a href=\"https:\/\/www.coindesk.com\/barclays-ripple-back-1-7-million-round-for-remittance-firm-using-xrp\"><span style=\"font-weight: 400;\">SendFriend<\/span><\/a><span style=\"font-weight: 400;\"> payment startup offering a solution in the field of international money transfers using XRP tokens.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Last but not least, in 2019 both leading payment systems announced their participation in Facebook\u2019s digital currency project <\/span><a href=\"https:\/\/forklog.com\/en\/gordon-einstein-the-fact-that-libra-stalled-reemphasizes-why-bitcoins-autonomy-is-so-important\/\"><span style=\"font-weight: 400;\">Libra<\/span><\/a><span style=\"font-weight: 400;\">, but, subsequently, they abandoned it, regulatory concerns being cited as the reason.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">At the same time, Visa spokesperson <\/span><a href=\"https:\/\/www.businessinsider.sg\/mastercard-ebay-stripe-leave-facebook-libra-cryptocurrency-project-payapl-2019-10\/\"><span style=\"font-weight: 400;\">noted<\/span><\/a><span style=\"font-weight: 400;\">:\u00a0<\/span><\/p>\n<blockquote><p><b><i>\u201cWe will continue to evaluate and our ultimate decision will be determined by a number of factors, including the [Libra] Association\u2019s ability to fully satisfy all requisite regulatory expectations. Visa\u2019s continued interest in Libra stems from our belief that well-regulated blockchain-based networks could extend the value of secure digital payments to a greater number of people and places, particularly in emerging and developing markets.\u201d\u00a0<\/i><\/b><\/p><\/blockquote>\n<p><span style=\"font-weight: 400;\">These Visa and MasterCard initiatives suggest that both companies are not only trying to find their place in the rapidly developing world of innovative financial services but also to maintain their status as the dominant forces in the market.<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">What does it mean for cryptocurrencies?<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Some members of the crypto community almost immediately stated that such steps by Visa are aimed at eliminating potential competitors and are informed by the principle \u201cif you can&#8217;t stop something, become part of it.\u201d<\/span><\/p>\n<p>https:\/\/twitter.com\/CrptoDemps\/status\/1216908384508604416<\/p>\n<p><span style=\"font-weight: 400;\">This sentiment was echoed by Trezor Wallet co-founder and, until recently, Casa Strategic Development Director Alena Vranova. In an exclusive comment to ForkLog, she said:<\/span><\/p>\n<blockquote><p><b><i>\u201cI&#8217;d say Visa doesn&#8217;t want to miss the blockchain train (whatever they think it is), but don&#8217;t want to carry the risk of development. So after backing off from Libra facing strong push back from the US Senate, they seem to go for a smoother sail with Plaid. <\/i><\/b><b><i>Or, in fact, it could be just a neutralization game.\u201d<\/i><\/b><\/p><\/blockquote>\n<p><span style=\"font-weight: 400;\">A similar point of view was expressed by Ripple CEO Brad Garlinghouse:<\/span><\/p>\n<blockquote class=\"twitter-tweet\" data-width=\"500\" data-dnt=\"true\">\n<p lang=\"en\" dir=\"ltr\">Not surprising to see this kind of consolidation, and expect this will set the stage for more to come in 2020 &#8211; in fintech, crypto and beyond. <a href=\"https:\/\/t.co\/SMVNxZd1br\">https:\/\/t.co\/SMVNxZd1br<\/a><\/p>\n<p>&mdash; Brad Garlinghouse (@bgarlinghouse) <a href=\"https:\/\/twitter.com\/bgarlinghouse\/status\/1216941455073255426?ref_src=twsrc%5Etfw\">January 14, 2020<\/a><\/p><\/blockquote>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<p><span style=\"font-weight: 400;\">A more conservative view is held by Chris Thomas, a fintech investor, and partner at Black House Private Equity. In an exclusive comment to ForkLog he said:<\/span><\/p>\n<blockquote><p><b><i>\u201cIt&#8217;s simply about expanding their ecosystem and gaining access to other clients who they can\u2019t normally get. <\/i><\/b><b><i>I don\u2019t think they&#8217;ll be able to control crypto by acquiring&#8230; but they can certainly learn and try to innovate &#8211; although this is a tough thing to do for an incumbent.\u201d<\/i><\/b><\/p><\/blockquote>\n<p><span style=\"font-weight: 400;\">This view is favored by the companies themselves. As Plaid works with the majority of fintech apps popular in the US, by acquiring it Visa gets access to a huge base of customers.<\/span><\/p>\n<blockquote><p><b><i>\u201cPlaid is a leader in the fast-growing fintech world with best-in-class capabilities and talent. The acquisition, combined with our many fintech efforts already underway, will position Visa to deliver even more value for developers, financial institutions and consumers,\u201d <\/i><\/b><a href=\"https:\/\/www.businesswire.com\/news\/home\/20200113005921\/en\/Visa-Acquire-Plaid?utm_source=Triggermail&amp;utm_medium=email&amp;utm_campaign=Post%20Blast%20bii-payments:%20Our%20take%20on%20Visa%27s%20%245.3B%20surprise%20acquisition%20of%20fintech%20Plaid&amp;utm_term=BII%20List%20PayCom_Banking_Fintech%20Content\"><i><span style=\"font-weight: 400;\">said<\/span><\/i><\/a><i><span style=\"font-weight: 400;\"> Al Kelly, CEO and chairman of Visa.<\/span><\/i><\/p><\/blockquote>\n<p><span style=\"font-weight: 400;\">On the other hand, Visa is a huge global network, which may help Plaid quickly and efficiently access new markets around the globe.\u00a0\u00a0<\/span><\/p>\n<blockquote><p><b><i>\u201cVisa is trusted by billions of consumers, businesses and financial institutions as a key part of the financial ecosystem, and together Visa and Plaid can support the rapid growth of digital financial services,\u201d<\/i><\/b> <a href=\"https:\/\/www.businesswire.com\/news\/home\/20200113005921\/en\/Visa-Acquire-Plaid?utm_source=Triggermail&amp;utm_medium=email&amp;utm_campaign=Post%20Blast%20bii-payments:%20Our%20take%20on%20Visa%27s%20%245.3B%20surprise%20acquisition%20of%20fintech%20Plaid&amp;utm_term=BII%20List%20PayCom_Banking_Fintech%20Content\"><i><span style=\"font-weight: 400;\">said<\/span><\/i><\/a><i><span style=\"font-weight: 400;\"> Zach Perret, CEO, and co-founder of Plaid.<\/span><\/i><span style=\"font-weight: 400;\">\u00a0<\/span><\/p><\/blockquote>\n<h2><span style=\"font-weight: 400;\">What You Can\u2019t Build, You Can Buy<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Visa made it crystal clear that its ambitions in the fintech sector are very high. In the aforementioned presentation, the company identified key growth areas (banking and investment, lending, consumer payments, financial management, and business services), and also indicated a high potential for expansion in international markets, where the number of fintech apps users is 15 times greater than in the US.<\/span><\/p>\n<p><img decoding=\"async\" src=\"https:\/\/forklog.com\/wp-content\/uploads\/visa-growth-1024x483.png\" \/><\/p>\n<p><span style=\"font-size: 10pt;\"><i><span style=\"font-weight: 400;\">Plaid growth opportunities. Source: <\/span><\/i><a href=\"https:\/\/s1.q4cdn.com\/050606653\/files\/doc_presentations\/2020\/Visa-Inc.-To-Acquire-Plaid-Presentation.pdf\"><i><span style=\"font-weight: 400;\">Visa<\/span><\/i><\/a><\/span><\/p>\n<p><span style=\"font-weight: 400;\">The fact that the payment services market needs drastic changes is confirmed by such giants as Visa and MasterCard paying very close attention to innovation in the fintech sector. Whether Visa\u2019s motifs behind these purchases are smothering the competition, chasing opportunities, or a bit of both, it is now obvious that the trend will continue.<\/span><\/p>\n<p><em><span style=\"font-weight: 400;\">Written by Andrew Asmakov<\/span><\/em><\/p>\n<p><b>Follow us on<\/b>\u00a0<a href=\"https:\/\/twitter.com\/forklogmedia\"><b>Twitter<\/b><\/a><b>\u00a0and\u00a0<\/b><a href=\"https:\/\/www.facebook.com\/forklogmedia\"><b>Facebook<\/b><\/a><b>\u00a0and join our\u00a0<\/b><a href=\"https:\/\/t.me\/forklogmedia\"><b>Telegram channel<\/b><\/a><b>\u00a0to know what\u2019s up with crypto and why it\u2019s important.<\/b><\/p>\n","protected":false},"excerpt":{"rendered":"<p>One of the high-profile deals in the financial market in January 2020 was the purchase of the Plaid fintech startup for $5.3 billion by the Visa payment system.\u00a0<\/p>\n","protected":false},"author":6,"featured_media":8161,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"select":"1","news_style_id":"","cryptorium_level":"","_short_excerpt_text":"","creation_source":"human_written","_metatest_mainpost_news_update":false,"footnotes":""},"categories":[3],"tags":[725,30,82,157],"class_list":["post-8158","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news-and-analysis","tag-acquisitions","tag-cryptocurrency","tag-fintech","tag-visa"],"aioseo_notices":[],"amp_enabled":true,"views":"614","promo_type":"1","layout_type":"","short_excerpt":"","is_update":"","_links":{"self":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts\/8158","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/comments?post=8158"}],"version-history":[{"count":2,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts\/8158\/revisions"}],"predecessor-version":[{"id":8160,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts\/8158\/revisions\/8160"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/media\/8161"}],"wp:attachment":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/media?parent=8158"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/categories?post=8158"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/tags?post=8158"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}