Visa Scoops Up $5.3-Billion Fintech Powering Crypto-to-Fiat Transactions for Coinbase and Abra
Payments giant Visa is expanding its reach in the mobile digital economy. On Monday, the company announced its multi-billion-dollar acquisition of Plaid, a fintech firm used by one in four people with a US bank account to connect their mobile financial apps to their bank accounts.
Plaid technology underlies thousands of apps and services such as Acorns, Betterment, Chime, Transferwise and Venmo. It also supports crypto-based companies such as Coinbase and Abra, enabling users in the US to transfer funds seamlessly from a bank account to their digital wallet, converting dollars to crypto.
As buying and spending habits continue to shift to sleek new smartphones that support powerful financial applications – from legacy players and crypto startups – Visa’s $5.3-billion acquisition will establish the 62-year-old company as a major player in the digital space. The company says the acquisition will allow it to expand into new businesses.
According to Visa’s announcement, 75% of the world’s internet-enabled consumers used a fintech application to initiate money movement in 2019 versus 18% in 2015.
The rise of blockchain-based platforms and cryptocurrencies such as Bitcoin continue to demonstrate how value, money and data can move 24/7, seamlessly and often instantly across digital networks that strip away cumbersome procedures, middlemen and old-school paperwork while shaving off days to settle transactions.
Coinbase has integrated Plaid to protect US customer information. According to Coinbase, customers’ banking credentials are never sent to Coinbase. Instead they’re shared with Plaid facilitate instant account verification. Plaid can store the provided credentials for verification purposes or use them on a per-transaction basis for fraud prevention, and help verify balances to process transactions.
Crypto wallet and exchange app Abra integrated Plaid last May. Founder and CEO Bill Barhydt says the technology gives users more ways to move between crypto and fiat, bringing thousands of additional financial institutions into the Abra ecosystem for US customers, facilitating the movement of dozens of cryptocurrencies.
Says Zach Perret, CEO and co-founder of Plaid,
“Plaid’s mission is to make money easier for everyone, and we are excited for this opportunity to continue delivering on that promise at a global scale.”
The San Francisco-based fintech company connects with over 11,000 financial institutions across the US, Canada and Europe.
Adds Perret,
“Visa is trusted by billions of consumers, businesses and financial institutions as a key part of the financial ecosystem, and together Visa and Plaid can support the rapid growth of digital financial services.”
Morgan Creek Digital co-founder Anthony Pompliano speculates that the consolidation trend will ramp up as Wall Street and other legacy players see just how rapidly the financial services industry is changing and how crypto is playing a pivotal role in innovative technologies.
In a newsletter note, Pompliano writes,
“As we see more consolidation in the fintech market, it is natural that crypto companies will be included in that trend. You will see custody businesses being acquired, along with everything from exchanges to asset managers to infrastructure businesses. The old financial system will start realizing that they need to be prepared to thrive in the new, alternative financial system.”
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