(Reuters) – The U.S. government on Thursday filed a lawsuit seeking to block Visa Inc from purchasing the financial technology firm Plaid.
In a complaint filed with the federal court in San Francisco, the government called Visa “a monopolist in online debit transactions” and said the proposed acquisition “would eliminate a nascent competitive threat” to that monopoly.
Visa said in January it agreed to buy privately held software startup Plaid Inc in a $5.3 billion deal that aimed to boost the payments giant’s access to the booming financial technology space.
Visa said it “strongly disagrees” with the lawsuit, adding that it “reflects a lack of understanding of Plaid’s business and the highly competitive payments landscape in which Visa operates.” The company said it “intends to defend the transaction vigorously.”
The Justice Department’s suit said Visa’s chief executive called the acquisition an “insurance policy” to neutralize a
“threat to our important U.S. debit business.”
Plaid, a financial technology firm with access to financial data from over 11,000 U.S. banks, “is a threat to this monopoly: it has been developing an innovative new solution that would be a substitute for Visa’s online debit services,” the Justice Department said.
Visa shares were up more than 2% in late-morning trading.
(Reporting by Jonathan Stempel in New York and David Shepardson in Washington; Editing by Dan Grebler)
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