11 ms·

Justice Department Sues to Block Visa's Proposed Acquisition of Plaid

286 points by nobody9999 6y ago

haltingproblem 6y ago
"Plaid has become the leading financial data aggregation company in the United States. Plaid is planning to leverage its connections to build a bank-linked payments network that would compete with Visa. Plaid’s money movement platform would allow consumers to pay merchants directly from their bank accounts using bank credentials rather than a debit card. Plaid’s established connections and technology uniquely positions it to enter the payments market and disrupt Visa’s monopoly" Fascinating. I think the line that DOJ is drawing is tenuous. It is not like removing Plaid from the marketplace would remove dangers to Visa's debit card monopoly. Wouldn't a Google/Apple/FB/Amazon be more of a platform threat. Google/Paypal already do this when you can directly pay from bank account to merchant. How does this help?
- ddoolin 6y ago
  The underlying argument is that they would probably just do it again with another competitor down the line, I believe. At its heart is anti-competitive behavior.
- cactus2093 6y ago
  It is quite a fascinating scenario. Apple and Google wallet are integrated into the credit card processing infrastructure. So they don't compete with Visa, their payments still go over Visa's rails. Plaid's killer feature has always been their private access to APIs that the banks won't give to anyone else. It's essentially like they're using modern web APIs while everyone else is using snail mail (i.e. ACH, bank transfers that settle in batches once per day). I'm not exactly sure how they struck those deals and why there is no reasonable, open integration path or payments protocols between banks in the US like there is in every other developed country. Is it just that the banks like making their $15 per wire transfer? It feels like there's got to be more to it but I'm not sure. But regardless, where we've ended up is the banks have fought so well to keep everybody out of their collective walled garden, but somehow Plaid has snuck in under the radar and has become so large and entrenched that they are themselves being called the monopolist, rather than the banks that own and control the system but of which there are multiple. I don't know enough about the details of Plaid's business though to weigh in on whether there's any truth to these claims.
  - JadoJodo 6y ago
    I was under the impression that they didn’t have access to any APIs but that they simply took your credentials and scraped the bank webpage.
    - someoldguy 6y ago
      I was under the impression it was a little of both, depending on the bank.
    - ceejayoz 6y ago
      They do some of both. When I link a Capital One account, I get an OAuth-style flow and the ability to select which accounts I share directly on the C1 website. The sites I use this on show up as "Linked Apps" in my security settings in C1. Others use the credentials-based flow.
      - semerda 6y ago
        Where they aren’t using APIs and instead the scrapers, does that mean they have your banking login credentials? Be curious to hear how they get around MFA.
        propogandist 6y ago
        Yes, they also can monitor and scan your financial transactions. Accepting their T&C and Privacy Policy gives them too much power, consumers are freely giving away access to their financial information for convenience.
        WrtCdEvrydy 6y ago
        > Accepting their T&C and Privacy Policy gives them too much power, consumers are freely giving away access to their <VERB> information for <THING>
        oh_sigh 6y ago
        So what? Convenience is nice. And I'm willing to pay for convenience when the other options are far less convenient.
- capableweb 6y ago
  > The complaint alleges that Visa’s CEO viewed the acquisition as an “insurance policy” to protect against a “threat to our important US debit business.” This quote makes it sound like Visa is acting monopolistic, which is the behavior they don't want to see. Rest of the paragraph > This acquisition is the second-largest in Visa’s history, with an extraordinary price tag of $5.3 billion. Visa’s CEO justified the deal to Visa’s Board of Directors as a “strategic, not financial” move, and noted that in part because “our US debit business i[s] critical and we must always do what it takes to protect this business.” Unless acquired, Visa feared that Plaid “on their own or owned by a competitor [was] going to create some threat” with a “potential downside risk of $300-500M in our US debit business” by 2024. If Plaid remained free to develop its competing payment platform, then “Visa may be forced to accept lower margins or not have a competitive offering.”
  - brendoelfrendo 6y ago
    Yeah, the Justice Department may not have scrutinized this acquisition all that much, but this guy said the quiet part out loud.
    - capableweb 6y ago
      It's unclear where these statements come from, but I find it hard to imagine they were meant to be public, the CEO would know better. Most likely they were internal conversations that got leaked or conversations that got logged which were part of some sort of warrant/information request. Or you're right and CEOs of huge multi-international companies are a lot more stupid than we previously thought.
      - brendoelfrendo 6y ago
        I mean, even if he said it internally, that's a dumb thing to say.
swiley 6y ago
When can we just use some kind of CA style PKI and let banks sign customers client side certs to sign payments? Having banks build payment networks from scratch with all kinds of weird fee structures, security problems, and other caveats really really sucks.
- toomuchtodo 6y ago
  https://corpgov.law.harvard.edu/2020/08/31/fednow-the-federal-reserves-planned-instant-payments-service/ https://corpgov.law.harvard.edu/2020/08/31/fednow-the-federa...
- koolba 6y ago
  Doesn’t chip and pin do this already? Also, even with signatures you still need some way to reverse errant and malicious charges. Cryptography isn’t a panacea for solving all real world problems.
  - zelly 6y ago
    Yes, modern cards are basically YubiKeys. You can't trust people (such as bank employees) to maintain private keys. That would never work. Maybe some kind of USB/Bluetooth device that can authorize your physical debit card can let online merchants debit bank accounts securely. I know they have had something similar in the UK for decades.
todipa 6y ago
Government's argument rests on the fact that Visa shouldn't acquire Plaid because of the potential technology they might create. This is a really dangerous argument. This is a direct quote from the plaintiff's argument: "While Plaid’s existing technology does not compete directly with Visa today, Plaid is planning to leverage that technology, combined with its existing relationships with banks and consumers, to facilitate transactions between consumers and merchants in competition with Visa. Like Visa’s online debit services, Plaid’s new debit service would enable consumers to pay for goods and services online with money debited from their bank accounts." I'm not a lawyer nor an expert in payments but this seems like a stretch to me.
- neolog 6y ago
  Big companies preemptively block competition. The government is right.
- SpicyLemonZest 6y ago
  The problem is that the Visa CEO allegedly believed the potential technology was coming soon, and allegedly told the Board of Directors to acquire Plaid so Visa wouldn't have to compete with its new technology. If the Justice Department were just randomly speculating, that'd be a different story.
- mitchellst 6y ago
  - Plaid is hardly alone in its competitive space. Even if Finicity sucks and SynapseFi is mid-implosion, they don't have a corner on capabilities like this indefinitely. MX is pretty alright. - That ignores FANG platforms that could implement similar money-moving features. - Stripe trotted out their "Banking as a Service" APIs today. - Let's not forget the Chinese giants that have obviated the day-to-day need for credit card networks in their country, whose strategists (and imitators) are eyeing global markets. If Visa's approach to this competitive threat is really acquire-and-kill, I hate to break it to them but... not even they can afford it. With all the innovation and competition in the space, best case scenario is that they bought themselves a year. And it turns out that, oops, Plaid wasn't even the closest. Stripe was. The case for monopolistic harm is slim. Even if there was monopolistic intent, it was probably incompetent.
tehlike 6y ago
Visa wants to enforce their duopoly by preventing others from accessing transaction data that plaid has.
tempsy 6y ago
Yeah I really didn’t like this deal when it was first announced. Plaid has a ton of bank account and transaction data on competitors to Visa that gives it a ridiculous advantage over its competitors.
- jcp2fa 6y ago
  I think this deal was more about Visa seeing a not so distant future where the payment rails shift to an API based interaction, not the data that Plaid has. Visa already probably has more data than they know what to do with.
throwawaysea 6y ago
Consolidation is bad, and big megacorps effectively break the market dynamic that fosters healthy competition, innovation, and reduces the cost of goods/services. I am happy to see acquisitions by megacorps blocked in general. But really we need a revision of antitrust law for the modern era, and we need it to be enforced.
- nobody9999 6y ago
  >But really we need a revision of antitrust law for the modern era, and we need it to be enforced. What revisions would you like to see? The underlying activities that make up the behavior we call "antitrust" haven't really changed. I'd say the solution is much more about muscular enforcement than revising the law. That said, there may be something I'm missing here.
  - throwawaysea 6y ago
    I'm being vague, but I think my concern is that the focus on "monopolistic behavior" is archaic. Harm to a healthily competitive environment can result from a few big players existing rather than a single dominant one. It may not even require certain "behavior" as much as a large entity with lots of capital simply existing. There are also big barriers to entry in any business that is built on network effects - even there, we need a mechanism to enable competition.
    - nobody9999 6y ago
      >I'm being vague, but I think my concern is that the focus on "monopolistic behavior" is archaic. I take your point. However, at least in the United States[0], the law does not require an entity to be a monopoly to engage in behavior that is anticompetitive and/or violates anti-trust laws. In fact, the topic at hand (Visa's proposed acquisition of Plaid) doesn't have a "monopoly" component at all. Rather, IIUC the DOJ is arguing that it runs afoul of section 7 of the Clayton Antitrust Act[1] which addresses mergers and acquisitions that limit competition. I don't disagree with your assessment of the situation, but I do think that existing law (and jurisprudence expanding on that law) address the vast majority of the issues impact competition today. [0] https://en.wikipedia.org/wiki/United_States_antitrust_law https://en.wikipedia.org/wiki/United_States_antitrust_law [1] https://en.wikipedia.org/wiki/Clayton_Act_of_1914#Section_7 https://en.wikipedia.org/wiki/Clayton_Act_of_1914#Section_7
nobody9999 6y ago
I was struck by this bit: 'If Plaid remained free to develop its competing payment platform, then “Visa may be forced to accept lower margins or not have a competitive offering."' My understanding is that Plaid would/could charge significantly less (up to 50% less) than Visa currently does. And that's the value of competition. Not necessarily as a race to the bottom (as we've seen in the airline industry, but that's another topic), but in providing Visa's customers with viable, more cost-effective alternatives. And that's been a problem (at least in the US) for a long time. Big corporations buying up potential competitors in order to maintain both their market share and their overpriced offerings.
- warent 6y ago
  I'm curious to hear more about the airline race to the bottom you're talking about. I've been flying once or twice a year for the last 7 years or so, and it's all pretty much been the same except perhaps a lot more addons and bagging fees. Were airlines very different in the past?
  - ori_b 6y ago
    > Were airlines very different in the past? Yes, they were much more expensive, but used to provide more for free. There was a time they even had legroom. https://www.theatlantic.com/business/archive/2013/02/how-airline-ticket-prices-fell-50-in-30-years-and-why-nobody-noticed/273506/ https://www.theatlantic.com/business/archive/2013/02/how-air...
    - porknubbins 6y ago
      Air travel has become so cheap you can pretty much subsidize 3-4 domestic trips a year with a good rewards credit card and flexible dates. I am not sure this is a net win for my personal happiness as I rarely take these trips for fun reasons.
      - mandelbrotwurst 6y ago
        Air travel has certainly become cheaper than it was in the past, but there are two sides to this - that credit card rewards are relatively high is largely a function of high credit card fees.
Technically 6y ago
I don't see how any activity here helps an alternative to cash for payments. I'm not even fussed about anonymity here: visa/mastercard seem to provide a nationalizable service at an extremely poor quality and cost. We really deserve much better as both payers and payees.
- jtsiskin 6y ago
  That’s interesting; yes, the government owns the Mint and is responsible for bills and coins; why don’t they provide the digital Mint as well?
Sephr 6y ago
Why couldn't the Justice Department do this for TurboTax's acquisition of Credit Karma?
- sdenton4 6y ago
  because republicans love tax software lobbyists? https://www.npr.org/sections/money/2019/04/03/709656642/episode-760-tax-hero https://www.npr.org/sections/money/2019/04/03/709656642/epis...
- fra 6y ago
  ... didn't they though? https://www.justice.gov/opa/pr/justice-department-requires-divestiture-credit-karma-tax-intuit-proceed-acquisition-credit https://www.justice.gov/opa/pr/justice-department-requires-d...
  - Sephr 6y ago
    Thanks, I didn't see this
zelly 6y ago
Plaid is more of a monopoly than Visa is. Plaid is literally the only way to do ACH without microdeposit verification. There is no reason Plaid should have a monopoly on this. If banks opened up APIs for bank account verification, then anyone could compete with Plaid. As usual the Justice Department doesn't know what they're talking about.
- lolinder 6y ago
  Saying Plaid were more of a monopoly than Visa is (and Visa is a pretty bad monopoly), isn't that an even bigger reason for the justice department to move to prevent this acquisition?
- MaxGabriel 6y ago
  Fwiw there are competitor services to Plaid, like Finicity
  - ukd1 6y ago
    or https://teller.io https://teller.io
- aliyfarah 6y ago
  This is a really bad take. Plaid is a 'monopoly' just as much as Stripe is. There is nothing stopping a company from doing the hard work of integrating thousands of banks using a single API. Furthermore, the fees Plaid charges are literally pennies, companies like Transferwise use them to do most of the bank transfers and yet still manage to offer the lowest rates for cross border payments. One final point: the future relevance of 'bank integration as an API' companies, such as plaid, is really murky. With the advent of Open Banking regulations, real time national payment systems etc the difficulty of integrating various banks using a single API will be drastically reduced.
- jkaplowitz 6y ago
  > Plaid is literally the only way to do ACH without microdeposit verification. The only way to do that in what context? When I had a very tiny freelance IT consulting side business in 2011 (and maybe some of 2010), TD Bank was happy to sell me ACH origination access as part of my business account. Yeah they charged me $10 per batch, so not great for a micro use case, but more tolerable when there are a bunch of higher-price-tag transactions per batch. They didn't require me to do any verification of the other account - they couldn't since the other account didn't have to be mine. I just had to agree to follow NACHA rules and I could put in any account number and routing number I wanted. It's amazing how much access a random individual is easily granted to pull and push money... (Obviously I didn't abuse it, and the blowback following a complaint would have been severe if I had.)
wholien 6y ago
This makes sense to be. By the way, you can see Plaid's docs about money transfer here: https://plaid.com/docs/bank-transfers/ https://plaid.com/docs/bank-transfers/ - don't think it's operational / available to the public yet tho But definitely, if Plaid can create their own rails (using the bank accounts' ACH/Wire systems), it would definitely be competitive to Visa in certain situations. You can let your mind fly, and it would take some time to proliferate. But many online merchants already allow ACH-payments. This would make it even easier.
waynesonfire 6y ago
the sad par this that Plaid exists because our banking system doesn't have an API. Plaid is a 5.3 billion dollar web scraper.
jo6gwb 6y ago
This press release is a month old - I didn't notice any new information released. See related article and discussion from early November here: https://news.ycombinator.com/item?id=24999975 https://news.ycombinator.com/item?id=24999975
tommilukkarinen 6y ago
Browsing forwards, I looked upon mentioned Sherman and Clayton acts. Clayton act seems to be specifically about mergers. It looks to me that Sherman act might not be applied to app stores because it excludes 'historic accident and growth' - but could it be up to discussion, because Apple and Google have changed rules after getting dominant position? Specifically preventing external payment mechanisms. https://www.ftc.gov/tips-advice/competition-guidance/guide-antitrust-laws/antitrust-laws https://www.ftc.gov/tips-advice/competition-guidance/guide-a... https://www.justice.gov/atr/competition-and-monopoly-single-firm-conduct-under-section-2-sherman-act-chapter-1#:~:text=Section%202%20of%20the%20Sherman%20Act%20makes%20it%20unlawful%20for,foreign%20nations%20.%20.%20.%20.%22 https://www.justice.gov/atr/competition-and-monopoly-single-...

286 points by nobody9999 6y ago

"Plaid has become the leading financial data aggregation company in the United States. Plaid is planning to leverage its connections to build a bank-linked payments network that would compete with Visa. Plaid’s money movement platform would allow consumers to pay merchants directly from their bank accounts using bank credentials rather than a debit card. Plaid’s established connections and technology uniquely positions it to enter the payments market and disrupt Visa’s monopoly" Fascinating. I think the line that DOJ is drawing is tenuous. It is not like removing Plaid from the marketplace would remove dangers to Visa's debit card monopoly. Wouldn't a Google/Apple/FB/Amazon be more of a platform threat. Google/Paypal already do this when you can directly pay from bank account to merchant. How does this help?

ddoolin 6y ago
The underlying argument is that they would probably just do it again with another competitor down the line, I believe. At its heart is anti-competitive behavior.
cactus2093 6y ago
It is quite a fascinating scenario. Apple and Google wallet are integrated into the credit card processing infrastructure. So they don't compete with Visa, their payments still go over Visa's rails. Plaid's killer feature has always been their private access to APIs that the banks won't give to anyone else. It's essentially like they're using modern web APIs while everyone else is using snail mail (i.e. ACH, bank transfers that settle in batches once per day). I'm not exactly sure how they struck those deals and why there is no reasonable, open integration path or payments protocols between banks in the US like there is in every other developed country. Is it just that the banks like making their $15 per wire transfer? It feels like there's got to be more to it but I'm not sure. But regardless, where we've ended up is the banks have fought so well to keep everybody out of their collective walled garden, but somehow Plaid has snuck in under the radar and has become so large and entrenched that they are themselves being called the monopolist, rather than the banks that own and control the system but of which there are multiple. I don't know enough about the details of Plaid's business though to weigh in on whether there's any truth to these claims.
- JadoJodo 6y ago
  I was under the impression that they didn’t have access to any APIs but that they simply took your credentials and scraped the bank webpage.
  - someoldguy 6y ago
    I was under the impression it was a little of both, depending on the bank.
  - ceejayoz 6y ago
    They do some of both. When I link a Capital One account, I get an OAuth-style flow and the ability to select which accounts I share directly on the C1 website. The sites I use this on show up as "Linked Apps" in my security settings in C1. Others use the credentials-based flow.
    - semerda 6y ago
      Where they aren’t using APIs and instead the scrapers, does that mean they have your banking login credentials? Be curious to hear how they get around MFA.
      - propogandist 6y ago
        Yes, they also can monitor and scan your financial transactions. Accepting their T&C and Privacy Policy gives them too much power, consumers are freely giving away access to their financial information for convenience.
        WrtCdEvrydy 6y ago
        > Accepting their T&C and Privacy Policy gives them too much power, consumers are freely giving away access to their <VERB> information for <THING>
        oh_sigh 6y ago
        So what? Convenience is nice. And I'm willing to pay for convenience when the other options are far less convenient.
capableweb 6y ago
> The complaint alleges that Visa’s CEO viewed the acquisition as an “insurance policy” to protect against a “threat to our important US debit business.” This quote makes it sound like Visa is acting monopolistic, which is the behavior they don't want to see. Rest of the paragraph > This acquisition is the second-largest in Visa’s history, with an extraordinary price tag of $5.3 billion. Visa’s CEO justified the deal to Visa’s Board of Directors as a “strategic, not financial” move, and noted that in part because “our US debit business i[s] critical and we must always do what it takes to protect this business.” Unless acquired, Visa feared that Plaid “on their own or owned by a competitor [was] going to create some threat” with a “potential downside risk of $300-500M in our US debit business” by 2024. If Plaid remained free to develop its competing payment platform, then “Visa may be forced to accept lower margins or not have a competitive offering.”
- brendoelfrendo 6y ago
  Yeah, the Justice Department may not have scrutinized this acquisition all that much, but this guy said the quiet part out loud.
  - capableweb 6y ago
    It's unclear where these statements come from, but I find it hard to imagine they were meant to be public, the CEO would know better. Most likely they were internal conversations that got leaked or conversations that got logged which were part of some sort of warrant/information request. Or you're right and CEOs of huge multi-international companies are a lot more stupid than we previously thought.
    - brendoelfrendo 6y ago
      I mean, even if he said it internally, that's a dumb thing to say.

swiley 6y ago

When can we just use some kind of CA style PKI and let banks sign customers client side certs to sign payments? Having banks build payment networks from scratch with all kinds of weird fee structures, security problems, and other caveats really really sucks.

toomuchtodo 6y ago
https://corpgov.law.harvard.edu/2020/08/31/fednow-the-federal-reserves-planned-instant-payments-service/ https://corpgov.law.harvard.edu/2020/08/31/fednow-the-federa...
koolba 6y ago
Doesn’t chip and pin do this already? Also, even with signatures you still need some way to reverse errant and malicious charges. Cryptography isn’t a panacea for solving all real world problems.
- zelly 6y ago
  Yes, modern cards are basically YubiKeys. You can't trust people (such as bank employees) to maintain private keys. That would never work. Maybe some kind of USB/Bluetooth device that can authorize your physical debit card can let online merchants debit bank accounts securely. I know they have had something similar in the UK for decades.

todipa 6y ago

Government's argument rests on the fact that Visa shouldn't acquire Plaid because of the potential technology they might create. This is a really dangerous argument. This is a direct quote from the plaintiff's argument: "While Plaid’s existing technology does not compete directly with Visa today, Plaid is planning to leverage that technology, combined with its existing relationships with banks and consumers, to facilitate transactions between consumers and merchants in competition with Visa. Like Visa’s online debit services, Plaid’s new debit service would enable consumers to pay for goods and services online with money debited from their bank accounts." I'm not a lawyer nor an expert in payments but this seems like a stretch to me.

neolog 6y ago
Big companies preemptively block competition. The government is right.
SpicyLemonZest 6y ago
The problem is that the Visa CEO allegedly believed the potential technology was coming soon, and allegedly told the Board of Directors to acquire Plaid so Visa wouldn't have to compete with its new technology. If the Justice Department were just randomly speculating, that'd be a different story.
mitchellst 6y ago
- Plaid is hardly alone in its competitive space. Even if Finicity sucks and SynapseFi is mid-implosion, they don't have a corner on capabilities like this indefinitely. MX is pretty alright. - That ignores FANG platforms that could implement similar money-moving features. - Stripe trotted out their "Banking as a Service" APIs today. - Let's not forget the Chinese giants that have obviated the day-to-day need for credit card networks in their country, whose strategists (and imitators) are eyeing global markets. If Visa's approach to this competitive threat is really acquire-and-kill, I hate to break it to them but... not even they can afford it. With all the innovation and competition in the space, best case scenario is that they bought themselves a year. And it turns out that, oops, Plaid wasn't even the closest. Stripe was. The case for monopolistic harm is slim. Even if there was monopolistic intent, it was probably incompetent.

tehlike 6y ago

Visa wants to enforce their duopoly by preventing others from accessing transaction data that plaid has.

tempsy 6y ago

Yeah I really didn’t like this deal when it was first announced. Plaid has a ton of bank account and transaction data on competitors to Visa that gives it a ridiculous advantage over its competitors.

jcp2fa 6y ago
I think this deal was more about Visa seeing a not so distant future where the payment rails shift to an API based interaction, not the data that Plaid has. Visa already probably has more data than they know what to do with.

throwawaysea 6y ago

Consolidation is bad, and big megacorps effectively break the market dynamic that fosters healthy competition, innovation, and reduces the cost of goods/services. I am happy to see acquisitions by megacorps blocked in general. But really we need a revision of antitrust law for the modern era, and we need it to be enforced.

nobody9999 6y ago
>But really we need a revision of antitrust law for the modern era, and we need it to be enforced. What revisions would you like to see? The underlying activities that make up the behavior we call "antitrust" haven't really changed. I'd say the solution is much more about muscular enforcement than revising the law. That said, there may be something I'm missing here.
- throwawaysea 6y ago
  I'm being vague, but I think my concern is that the focus on "monopolistic behavior" is archaic. Harm to a healthily competitive environment can result from a few big players existing rather than a single dominant one. It may not even require certain "behavior" as much as a large entity with lots of capital simply existing. There are also big barriers to entry in any business that is built on network effects - even there, we need a mechanism to enable competition.
  - nobody9999 6y ago
    >I'm being vague, but I think my concern is that the focus on "monopolistic behavior" is archaic. I take your point. However, at least in the United States[0], the law does not require an entity to be a monopoly to engage in behavior that is anticompetitive and/or violates anti-trust laws. In fact, the topic at hand (Visa's proposed acquisition of Plaid) doesn't have a "monopoly" component at all. Rather, IIUC the DOJ is arguing that it runs afoul of section 7 of the Clayton Antitrust Act[1] which addresses mergers and acquisitions that limit competition. I don't disagree with your assessment of the situation, but I do think that existing law (and jurisprudence expanding on that law) address the vast majority of the issues impact competition today. [0] https://en.wikipedia.org/wiki/United_States_antitrust_law https://en.wikipedia.org/wiki/United_States_antitrust_law [1] https://en.wikipedia.org/wiki/Clayton_Act_of_1914#Section_7 https://en.wikipedia.org/wiki/Clayton_Act_of_1914#Section_7

nobody9999 6y ago

I was struck by this bit: 'If Plaid remained free to develop its competing payment platform, then “Visa may be forced to accept lower margins or not have a competitive offering."' My understanding is that Plaid would/could charge significantly less (up to 50% less) than Visa currently does. And that's the value of competition. Not necessarily as a race to the bottom (as we've seen in the airline industry, but that's another topic), but in providing Visa's customers with viable, more cost-effective alternatives. And that's been a problem (at least in the US) for a long time. Big corporations buying up potential competitors in order to maintain both their market share and their overpriced offerings.

warent 6y ago
I'm curious to hear more about the airline race to the bottom you're talking about. I've been flying once or twice a year for the last 7 years or so, and it's all pretty much been the same except perhaps a lot more addons and bagging fees. Were airlines very different in the past?
- ori_b 6y ago
  > Were airlines very different in the past? Yes, they were much more expensive, but used to provide more for free. There was a time they even had legroom. https://www.theatlantic.com/business/archive/2013/02/how-airline-ticket-prices-fell-50-in-30-years-and-why-nobody-noticed/273506/ https://www.theatlantic.com/business/archive/2013/02/how-air...
  - porknubbins 6y ago
    Air travel has become so cheap you can pretty much subsidize 3-4 domestic trips a year with a good rewards credit card and flexible dates. I am not sure this is a net win for my personal happiness as I rarely take these trips for fun reasons.
    - mandelbrotwurst 6y ago
      Air travel has certainly become cheaper than it was in the past, but there are two sides to this - that credit card rewards are relatively high is largely a function of high credit card fees.

Technically 6y ago

I don't see how any activity here helps an alternative to cash for payments. I'm not even fussed about anonymity here: visa/mastercard seem to provide a nationalizable service at an extremely poor quality and cost. We really deserve much better as both payers and payees.

jtsiskin 6y ago
That’s interesting; yes, the government owns the Mint and is responsible for bills and coins; why don’t they provide the digital Mint as well?

Sephr 6y ago

Why couldn't the Justice Department do this for TurboTax's acquisition of Credit Karma?

sdenton4 6y ago
because republicans love tax software lobbyists? https://www.npr.org/sections/money/2019/04/03/709656642/episode-760-tax-hero https://www.npr.org/sections/money/2019/04/03/709656642/epis...
fra 6y ago
... didn't they though? https://www.justice.gov/opa/pr/justice-department-requires-divestiture-credit-karma-tax-intuit-proceed-acquisition-credit https://www.justice.gov/opa/pr/justice-department-requires-d...
- Sephr 6y ago
  Thanks, I didn't see this

zelly 6y ago

Plaid is more of a monopoly than Visa is. Plaid is literally the only way to do ACH without microdeposit verification. There is no reason Plaid should have a monopoly on this. If banks opened up APIs for bank account verification, then anyone could compete with Plaid. As usual the Justice Department doesn't know what they're talking about.

lolinder 6y ago
Saying Plaid were more of a monopoly than Visa is (and Visa is a pretty bad monopoly), isn't that an even bigger reason for the justice department to move to prevent this acquisition?
MaxGabriel 6y ago
Fwiw there are competitor services to Plaid, like Finicity
- ukd1 6y ago
  or https://teller.io https://teller.io
aliyfarah 6y ago
This is a really bad take. Plaid is a 'monopoly' just as much as Stripe is. There is nothing stopping a company from doing the hard work of integrating thousands of banks using a single API. Furthermore, the fees Plaid charges are literally pennies, companies like Transferwise use them to do most of the bank transfers and yet still manage to offer the lowest rates for cross border payments. One final point: the future relevance of 'bank integration as an API' companies, such as plaid, is really murky. With the advent of Open Banking regulations, real time national payment systems etc the difficulty of integrating various banks using a single API will be drastically reduced.
jkaplowitz 6y ago
> Plaid is literally the only way to do ACH without microdeposit verification. The only way to do that in what context? When I had a very tiny freelance IT consulting side business in 2011 (and maybe some of 2010), TD Bank was happy to sell me ACH origination access as part of my business account. Yeah they charged me $10 per batch, so not great for a micro use case, but more tolerable when there are a bunch of higher-price-tag transactions per batch. They didn't require me to do any verification of the other account - they couldn't since the other account didn't have to be mine. I just had to agree to follow NACHA rules and I could put in any account number and routing number I wanted. It's amazing how much access a random individual is easily granted to pull and push money... (Obviously I didn't abuse it, and the blowback following a complaint would have been severe if I had.)

wholien 6y ago

This makes sense to be. By the way, you can see Plaid's docs about money transfer here: https://plaid.com/docs/bank-transfers/ https://plaid.com/docs/bank-transfers/ - don't think it's operational / available to the public yet tho But definitely, if Plaid can create their own rails (using the bank accounts' ACH/Wire systems), it would definitely be competitive to Visa in certain situations. You can let your mind fly, and it would take some time to proliferate. But many online merchants already allow ACH-payments. This would make it even easier.

waynesonfire 6y ago

the sad par this that Plaid exists because our banking system doesn't have an API. Plaid is a 5.3 billion dollar web scraper.

jo6gwb 6y ago

This press release is a month old - I didn't notice any new information released. See related article and discussion from early November here: https://news.ycombinator.com/item?id=24999975 https://news.ycombinator.com/item?id=24999975

tommilukkarinen 6y ago

Browsing forwards, I looked upon mentioned Sherman and Clayton acts. Clayton act seems to be specifically about mergers. It looks to me that Sherman act might not be applied to app stores because it excludes 'historic accident and growth' - but could it be up to discussion, because Apple and Google have changed rules after getting dominant position? Specifically preventing external payment mechanisms. https://www.ftc.gov/tips-advice/competition-guidance/guide-antitrust-laws/antitrust-laws https://www.ftc.gov/tips-advice/competition-guidance/guide-a... https://www.justice.gov/atr/competition-and-monopoly-single-firm-conduct-under-section-2-sherman-act-chapter-1#:~:text=Section%202%20of%20the%20Sherman%20Act%20makes%20it%20unlawful%20for,foreign%20nations%20.%20.%20.%20.%22 https://www.justice.gov/atr/competition-and-monopoly-single-...