Visa wants to enforce their duopoly by preventing others from accessing transaction data that plaid has.
Justice Department Sues to Block Visa's Proposed Acquisition of Plaid
11–20 of 119 posts
Re: Justice Department Sues to Block Visa's Proposed Acquisition of Plaid
#12Government's argument rests on the fact that Visa shouldn't acquire Plaid because of the potential technology they might create. This is a really dangerous argument. This is a direct quote from the plaintiff's argument: "While Plaid’s existing technology does not compete directly with Visa today, Plaid is planning to leverage that technology, combined with its existing relationships with banks and consumers, to facil…
- Plaid is hardly alone in its competitive space. Even if Finicity sucks and SynapseFi is mid-implosion, they don't have a corner on capabilities like this indefinitely. MX is pretty alright.
- That ignores FANG platforms that could implement similar money-moving features.
- Stripe trotted out their "Banking as a Service" APIs today.
- Let's not forget the Chinese giants that have obviated the day-to-day need for credit card networks in their country, whose strategists (and imitators) are eyeing global markets.
If Visa's approach to this competitive threat is really acquire-and-kill, I hate to break it to them but... not even they can afford it. With all the innovation and competition in the space, best case scenario is that they bought themselves a year. And it turns out that, oops, Plaid wasn't even the closest. Stripe was.
The case for monopolistic harm is slim. Even if there was monopolistic intent, it was probably incompetent.
Re: Justice Department Sues to Block Visa's Proposed Acquisition of Plaid
#13"Plaid has become the leading financial data aggregation company in the United States. Plaid is planning to leverage its connections to build a bank-linked payments network that would compete with Visa. Plaid’s money movement platform would allow consumers to pay merchants directly from their bank accounts using bank credentials rather than a debit card. Plaid’s established connections and technology uniquely positio…
> The complaint alleges that Visa’s CEO viewed the acquisition as an “insurance policy” to protect against a “threat to our important US debit business.”
This quote makes it sound like Visa is acting monopolistic, which is the behavior they don't want to see.
Rest of the paragraph
> This acquisition is the second-largest in Visa’s history, with an extraordinary price tag of $5.3 billion. Visa’s CEO justified the deal to Visa’s Board of Directors as a “strategic, not financial” move, and noted that in part because “our US debit business i[s] critical and we must always do what it takes to protect this business.” Unless acquired, Visa feared that Plaid “on their own or owned by a competitor [was] going to create some threat” with a “potential downside risk of $300-500M in our US debit business” by 2024. If Plaid remained free to develop its competing payment platform, then “Visa may be forced to accept lower margins or not have a competitive offering.”
Re: Justice Department Sues to Block Visa's Proposed Acquisition of Plaid
#14Yeah I really didn’t like this deal when it was first announced.
Plaid has a ton of bank account and transaction data on competitors to Visa that gives it a ridiculous advantage over its competitors.
Re: Justice Department Sues to Block Visa's Proposed Acquisition of Plaid
#15Consolidation is bad, and big megacorps effectively break the market dynamic that fosters healthy competition, innovation, and reduces the cost of goods/services. I am happy to see acquisitions by megacorps blocked in general. But really we need a revision of antitrust law for the modern era, and we need it to be enforced.
Re: Justice Department Sues to Block Visa's Proposed Acquisition of Plaid
#16Government's argument rests on the fact that Visa shouldn't acquire Plaid because of the potential technology they might create. This is a really dangerous argument. This is a direct quote from the plaintiff's argument: "While Plaid’s existing technology does not compete directly with Visa today, Plaid is planning to leverage that technology, combined with its existing relationships with banks and consumers, to facil…
What is “dangerous” about it? It isn’t as if the DOJ is the one speculating as to what the motive is or was, it’s that they have specific evidence of communication between Plaid and Visa that spelled out Plaid’s plan to basically “scare” Visa and Visa’s concern of their plan.
This feels like one of those situations where two parties were so conspicuous is making an anti-trust case that the DOJ could not do anything but prosecute.
Re: Justice Department Sues to Block Visa's Proposed Acquisition of Plaid
#17"Plaid has become the leading financial data aggregation company in the United States. Plaid is planning to leverage its connections to build a bank-linked payments network that would compete with Visa. Plaid’s money movement platform would allow consumers to pay merchants directly from their bank accounts using bank credentials rather than a debit card. Plaid’s established connections and technology uniquely positio…
It is quite a fascinating scenario. Apple and Google wallet are integrated into the credit card processing infrastructure. So they don't compete with Visa, their payments still go over Visa's rails. Plaid's killer feature has always been their private access to APIs that the banks won't give to anyone else. It's essentially like they're using modern web APIs while everyone else is using snail mail (i.e. ACH, bank tra…
I was under the impression that they didn’t have access to any APIs but that they simply took your credentials and scraped the bank webpage.
Re: Justice Department Sues to Block Visa's Proposed Acquisition of Plaid
#18Earlier quoted context omitted.
It is quite a fascinating scenario. Apple and Google wallet are integrated into the credit card processing infrastructure. So they don't compete with Visa, their payments still go over Visa's rails. Plaid's killer feature has always been their private access to APIs that the banks won't give to anyone else. It's essentially like they're using modern web APIs while everyone else is using snail mail (i.e. ACH, bank tra…
I was under the impression that they didn’t have access to any APIs but that they simply took your credentials and scraped the bank webpage.
I was under the impression it was a little of both, depending on the bank.
Re: Justice Department Sues to Block Visa's Proposed Acquisition of Plaid
#19Government's argument rests on the fact that Visa shouldn't acquire Plaid because of the potential technology they might create. This is a really dangerous argument. This is a direct quote from the plaintiff's argument: "While Plaid’s existing technology does not compete directly with Visa today, Plaid is planning to leverage that technology, combined with its existing relationships with banks and consumers, to facil…
What is “dangerous” about it? It isn’t as if the DOJ is the one speculating as to what the motive is or was, it’s that they have specific evidence of communication between Plaid and Visa that spelled out Plaid’s plan to basically “scare” Visa and Visa’s concern of their plan. This feels like one of those situations where two parties were so conspicuous is making an anti-trust case that the DOJ could not do anything b…
I believe the word 'dangerous' has developed a new meaning; roughly "this doesn't align with my personal politics." Whatever my politics happen to be are assumed by me to be best for society, and consequently anything that doesn't go my way threatens to harm society. For instance, if I were a libertarian I might think that attempts to regulate corporations would create inefficiencies that would harm society by harming the economy. Or if I were a social democrat, I might think that failure to regulate corporations will harm society by letting corporations run rampant on people. In either case, very sure of my own beliefs, it seems self evident to me that those who disagree with me present a danger to society.
That is, unless, I have the humility to earnestly be cognizant of the possibility that I could be wrong about what I believe. If I have that humility, I might choose to temper my criticism of others.
Re: Justice Department Sues to Block Visa's Proposed Acquisition of Plaid
#20I was struck by this bit:
'If Plaid remained free to develop its competing payment platform, then “Visa may be forced to accept lower margins or not have a competitive offering."'
My understanding is that Plaid would/could charge significantly less (up to 50% less) than Visa currently does.
And that's the value of competition. Not necessarily as a race to the bottom (as we've seen in the airline industry, but that's another topic), but in providing Visa's customers with viable, more cost-effective alternatives.
And that's been a problem (at least in the US) for a long time. Big corporations buying up potential competitors in order to maintain both their market share and their overpriced offerings.