The purchase is Visa’s ultimate power play.
This article originally ran in Term Sheet, Fortune’s newsletter about deals and dealmakers. Sign up here.
We live in a time of epic deals. I audibly gasped yesterday when I found out that Visa agreed to buy Plaid, a fintech company that connects users’ bank accounts to apps and services, for an eye-popping $5.3 billion. That’s two times more than Plaid’s most recent private valuation — a huge win for its venture investors.
In late 2018, Plaid raised $250 million in Series C funding at a $2.65 billion valuation. The round was a who’s who of Silicon Valley: Mary Meeker led the financing (from Kleiner Perkins’s growth fund), and was joined by investors including Andreessen Horowitz, Index Ventures, Goldman Sachs, NEA, and Spark Capital.
It was later revealed that competitors Visa and Mastercard both bet on Plaid through “strategic investments” in the same round. Visa said it was determined to “stay relevant” as its industry evolves. “Companies like Plaid wake up every day thinking about these [factors],” Bill Sheedy, executive vice president of Visa’s strategy group, told Fortune at the time. “It’s very different from how we’ve thought about product innovation in the past.”
My colleague Rey Mashayekhi reports that the deal is about expanding Visa’s services beyond its debit and credit card solutions and into a broader consumer experience.
“We are increasingly trying to move from being strictly focused on payments, to being focused on the movement of funds for any purpose around the world,” said Visa CEO Al Kelly in a conference call on Monday. “As big as Visa is in terms of the bank accounts that we can reach, we’re not as big as we need to be if we want to be a formidable player in money movement around the world.”
While much of tech press is focused on covering flashy companies like WeWork and Away, there are huge things happening on the non-consumer front that are arguably as exciting (and important). This is a massive power play by Visa that goes beyond the sticker price — it shows that Visa might also believe that cardless payment forms could one day fully replace their plastic cards.
I would pay good money to see what’s going on at Mastercard’s offices today. This acquisition will send shockwaves throughout the entire financial services industry.
Polina Marinova
Twitter: @polina_marinova
Email: polina.marinova@fortune.com
