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MarketScreener Homepage  >  Equities  >  Nyse  >  Visa    V


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Visa to Pay $5.3 Billion For Fintech Startup Plaid -- WSJ

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01/14/2020 | 02:48am EST

By Cara Lombardo and AnnaMaria Andriotis

Visa Inc. said Monday it would buy Plaid Inc. for $5.3 billion, as part of an effort by the card giant to tap into consumers' growing use of financial-technology apps and noncard payments.

More consumers over the past decade have been using financial-services apps to manage their savings and spending, and Plaid sits in the middle of those relationships, providing software that gives the apps access to financial accounts. Venmo, PayPal Holdings Inc.'s money-transfer service, is one of privately held Plaid's biggest customers.

Visa is the largest U.S. card network, handling $3.4 trillion of credit, debit and prepaid-card transactions in the first nine months of 2019, according to the Nilson Report. Its clients are largely comprised of banks that issue credit and debit cards, but the company is looking to expand its presence in the burgeoning field of electronic payments, where trillions of dollars are sent by wire transfer or between bank accounts globally each year.

On an investor conference call following the Monday announcement, Visa Chief Executive Al Kelly said the acquisition would help expand the company's access to financial-technology firms while accelerating its movement outside of cards. The deal was reported earlier Monday by The Wall Street Journal.

Visa last year acquired control of Earthport, which provides cross-border payment services to banks and businesses, after rival Mastercard Inc. also made an offer for the company. Before that, Mastercard bought payment-technology firm Vocalink, which enables the movement of payments between bank accounts.

These moves are essentially a way for the giant networks to diversify, preparing for the possibility that noncard-payment forms could one day replace their cards.

Card networks are concerned that consumer payments could move away from debit and credit cards to bank accounts, essentially allowing consumers to pay for products directly out of their bank accounts while bypassing so-called card rails altogether.

Bank-account payments also offer a way into business-to-business payments, a sector in which card companies have been trying to play a bigger role because it is viewed as untapped compared with consumer payments.

The deal could also help Visa address banks' concerns about security as more new players like Plaid gain access to their customers' information. It could boost Plaid's standing with banks that have been wary of the services it offers and clashed with fintech firms over their use of Plaid to access bank-customer account data.

Visa is paying a significant premium over Plaid's valuation of roughly $2.65 billion in a 2018 funding round, though the purchase price still represents a rounding error for a company with a market value of some $420 billion.

Both Visa and Mastercard had invested in Plaid as part of the $250 million funding round.

Plaid was founded in 2012 by Zach Perret, who is its current chief executive, and William Hockey. Its other investors include venture-capital firms Andreessen Horowitz LLC and Kleiner Perkins.

Write to Cara Lombardo at cara.lombardo@wsj.com and AnnaMaria Andriotis at annamaria.andriotis@wsj.com

Stocks mentioned in the article
ChangeLast1st jan.
MASTERCARD 0.21% 324.98 Delayed Quote.8.61%
PAYPAL HOLDINGS 2.07% 117.89 Delayed Quote.6.78%
VISA -0.66% 206.52 Delayed Quote.10.64%
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Financials (USD)
Sales 2020 25 444 M
EBIT 2020 17 213 M
Net income 2020 13 753 M
Debt 2020 3 594 M
Yield 2020 0,56%
P/E ratio 2020 33,6x
P/E ratio 2021 28,8x
EV / Sales2020 17,7x
EV / Sales2021 15,8x
Capitalization 448 B
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Technical analysis trends VISA
Short TermMid-TermLong Term
Income Statement Evolution
Mean consensus BUY
Number of Analysts 38
Average target price 215,65  $
Last Close Price 207,90  $
Spread / Highest target 20,7%
Spread / Average Target 3,73%
Spread / Lowest Target -20,2%
EPS Revisions
Alfred F. Kelly Chairman & Chief Executive Officer
Ryan McInerney President
Vasant M. Prabhu Vice Chairman & Chief Financial Officer
Rajat Taneja President-Technology
John A. C. Swainson Independent Director
Sector and Competitors
1st jan.Capitalization (M$)
VISA10.64%447 981
MASTERCARD8.61%327 185
AVAST20.80%7 244