The Department of Justice didn't like Visa's $5 billion+ bid for open API platform provider Plaid, scuppering it in late 2020: High entry barriers" to the online debit services world that Visa dominates, "coupled with Visa’s long-term, restrictive contracts with banks, are nearly insurmountable, meaning Visa rarely faces any significant threats to its online debit monopoly. Plaid is such a threat" government lawyers argued crisply.
Now the financial services giant -- which handles more than than 65,000 transaction messages per second on its VisaNet infrastructure and $11 trillion+ in total transaction volume -- has turned its eyes to Europe, swooping on Plaid rival Tink today with a proposed $2.2 billion buyout agreed by both parties June 24.
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Stockholm-headquartered Tink claims 300 banks and fintechs in 18 European markets as customers. It offers an API-powered platform that lets users pull customer data from banks, to build data-powered products. (Europe's PSD2 mandates that banks allow registered third-party providers to the data of consenting customers.) Tink, which sits a tight second behind Plaid in the Q1 2021 Forrester New Wave: Open Banking Intermediaries report also supports payment capabilities in France, Italy, Portugal, Sweden, and the UK.
"The combination of Visa’s proven infrastructure and sustained investment in resilience, cybersecurity and fraud prevention with Tink’s APIs, technology and customer relationships is expected to help accelerate the adoption of open banking in Europe by ensuring a secure, reliable platform for innovation," Visa said, adding: "Gusinesses large and small will have a greater and more customized range of tools to operate digitally and securely, whether reconciling bank statements and accounts or enabling alternative financing"
Forrester praises Tink highly, noting that its "history of reverse engineering APIs and ability to provide direct data access makes it easy to extend open banking services beyond just regulatory requirements.
"Services sit behind its single API, which aids swift deployment, Forrester noted earlier this year, adding: "Value-added services focus on customer or business financial management, with B2B2C white-label solutions — developers will love the well-documented API and rich developer portal."
“Visa is committed to doing all we can to foster innovation and empower consumers in support of Europe’s open banking goals,” said Al Kelly, CEO and Chairman of Visa in a canned statement on June 24. “By bringing together Visa’s network of networks and Tink’s open banking capabilities we will deliver increased value to European consumers and businesses with tools to make their financial lives more simple, reliable and secure.”
The cash buyout transaction is, of course, subject to regulatory approvals and other customary closing conditions. Visa agreed to acquire Plaid "in part to eliminate [an] existential risk and protect its monopoly in online debit" DoJ lawyers had argued, with Visa’s CEO justifying the extraordinary purchase price for Plaid (50X revenue multiple) as a “strategic, not financial” move because “[o]ur US debit business i[s] critical and we must always do what it takes to protect this business.”
Tink may not be quite the same size threat, but European regulators will be reading that DoJ docket with interest none-the-less.