Visa to acquire Plaid for $5.3 billion

Payments giant Visa is buying Silicon Valley start-up Plaid in a deal worth $5.3 billion, that is 2 times its final private valuation.

Plaid develops financial services APIs and helps financial technology developers share banking and other financial information more easily. However, the average person interacting with it most likely wouldn’t recognize the name. It’s the kind of service that should be of value for a company like Visa. High-profile Plaid customers include popular peer-to-peer payment app Venmo, mobile investing app Robinhood and cryptocurrency exchanges Coinbase and Gemini.

As of December, Plaid said one in four people in the United States with bank accounts have connected to the fintech company through an app. Both Visa and Mastercard, and Goldman Sachs were early investors in the start-up, along with the venture arms of Citi and American Express.

Visa said the deal has the potential to add as much as 100 basis points to the company’s net revenue growth by 2021.The Wall Street Journal first reported the Visa acquisition.

Plaid has grown steadily with its list of customers since it launched in 2013. The company says it integrates with more than 11,000 banks and connects to more than 20 million consumer accounts. While no official figures are available, Plaid said its customer base doubled from 2017 to 2018 and has expanded to the U.K. and Canada.

CEO Zach Perret has told CNBC the Plaid team got to know Visa through its initial strategic investment, which was a “jumping off point for a series of conversations” leading up to the deal. Perret, who co-founded the company with a former Bain colleague William Hockey, said the Visa brand would help Plaid scale its products and global footprint.