Protocol | Fintech

Visa failed with Plaid. What’s its fintech plan now?

It's keen on striking partnerships and wants to be as prominent as Stripe, said Visa fintech boss Terry Angelos. But don't count out more M&A just yet.

Visa payment

Visa wants to play a central role in the future of fintech.

Image: Roy Rochlin / Getty Images

Terry Angelos doesn't like to talk about Plaid too much these days.

As Visa's first-ever global head of fintech, he was at the center of the corporate giant's recent failed bid to buy Plaid. "I'm not gonna comment much further on Plaid that we haven't already said," he told Protocol, referring to Visa's decision to walk away from the $5.3 billion deal to avoid a potentially protracted antitrust legal battle with the Justice Department.

But Visa's fintech ambitions go beyond Plaid, he noted. And Angelos has many other things to say about the space, which he said Visa initially was previously unsure how to approach, but now views as a fast-growing sector where the payments company hopes to play a critically important role.

"Fintechs innovate in ways that we hadn't seen," Angelos said. "So we've made some big steps in understanding the value of fintech. And today we see it as a growth engine for Visa. Without a doubt, it's one of the biggest growth engines for us."

Shortly after the Plaid deal ended, Angelos quickly pivoted to a brand new fintech offensive. Three weeks ago, he helped launch Visa Cloud Connect, a platform that would enable fintechs to connect to its international payment network without having to set up local payments infrastructure in each location.

Angelos said the initiative was part of Visa's more proactive approach to fintechs. "One of the things I like to do is just to ask fintechs a very simple question: What would you want from us?" A year and a half ago, Kristo Kaarmann, CEO of TransferWise, the money-transfer company, offered a response that led to the Visa Cloud Connect: "Can we connect to you via the cloud?"

TransferWise is Visa Cloud Connect's first customer. Venkatesh Saha, head of expansion at TransferWise, said the new system "means someone like me doesn't need to go and speak to the Visa local team whether it's from Australia or Brazil or the UAE."

Angelos said that, for fintechs, the cloud removes the hassle of setting up a data center in each country where they want to connect to the Visa network. "They don't have to physically manage and operate servers," he said. "Our clients can remain in the cloud."

"We have adjusted the way that we work with these companies," Angelos said.

Learning fintech

It took time for Visa to make those sorts of adjustments.

"As with any large organization, as fintechs were emerging, it was less clear to our organization what role we should play, and whether or not fintechs were expanding the pie or reducing the pie," Angelos said. "It took some time for us to sort of convey that this was really about expanding the payment use cases. Today that's very clear. Five years ago, that was less clear."

Angelos played a role in achieving that clarity at Visa partly due to his background as a serial entrepreneur. "My career has always been at startups," he said. He landed at Visa after the company acquired TrialPay, an ecommerce platform he co-founded in 2006, and one of the companies he helped launch in the 1990s. Another was an online retailer called living.com, which launched at the height of the dot-com boom. "We were the furniture tab on Amazon.com in early 2000 when they were exploring partnerships outside of books," he said.

His entrepreneurial career eventually shifted his focus to payments, which led to the creation of TrialPay. His startup worked with the major networks including Visa, MasterCard and American Express. "When we were on the other side of this, it was often very difficult to understand and connect these large networks," he said.

"Startups are difficult and a lot of fun," Angelos added. "[But] one of the things that's really hard to do is to get distribution for the innovation that you've created."

That was a factor in the decision to sell the startup to Visa, he said: "One of our biggest reasons for the acquisition was to get access to Visa's scale."

Visa, which was founded in 1958, has more than 20,000 employees and serves more than 15,000 financial institutions with more than 3.5 billion cards in the market worldwide. Last year, it processed $11.3 trillion in transactions, the company said.

Shifting from being a startup leader to an executive of a financial services behemoth turned out to be an upbeat experience for Angelos. He was named Visa's first global head of fintech in 2019.

"To my surprise, I have found Visa to be infinitely interesting," said Angelos, who grew up in South Africa and moved to the U.S. in the '90s for graduate studies at Harvard. "The sets of problems that we're solving are incredibly interesting at an intellectual level. The scope of the company is just enormous. A fun challenge right now is how do we, as an organization, create a fintech and developer ecosystem that is thinking, 'default Visa.'"

Once bitten, not shy

But Visa's vision is not just about partnering and wooing fintechs. Despite what happened with the Plaid deal, acquisitions will continue to be part of Visa's game plan. "I don't think we have any plans to alter our strategy around M&A," Angelos said.

Visa's archrival, MasterCard, also made its own big M&A move when it bought Plaid competitor Finicity last year. Unlike the Plaid deal, MasterCard's acquisition was okayed by the Justice Department. Login Allin, managing partner and founder of Fin Venture Capital, said the M&A activity underscored the pressure the two old guards of the payments industry are facing as nimbler fintech startups blaze new trails in a market they had dominated for decades. "They're moving now with a far greater degree of urgency because of the innovation that's happening," he told Protocol.

In fact, these worries appeared to come out in Visa's bid to buy Plaid. In arguing that the proposed merger was anticompetitive, the Justice Department cited Visa CEO Al Kelly's comment describing the deal as an "insurance policy" aimed at neutralizing a "threat to our important U.S. debit business."

Allin called the comment "problematic." "I'm like, who coached him on that?" he said. "That was just not a smart move in terms of how he was positioning the acquisition."

Asked if there have been any changes in Visa's M&A game plan resulting from the failed Plaid bid, Angelos was quick in answer: "No." But he declined to comment on Kelly's comment.

He also downplayed the view that Visa is competing with fintech startups, and instead highlighted the partnerships the company has forged with these companies. "I don't think this is a fintech versus Visa market at all," he said. "I think this is a fintech market innovating on Visa rails. If you look at the largest fintechs today and the emerging category of fintechs, what they're doing is expanding the pie."

"Let's take something as simple as cash," he said. "There's $18 trillion of cash out there today; that's double the payment volume of Visa. If fintechs are able to help consumers, especially in countries where cash is the dominant form of payments, move onto a digital form, Visa is going to be one of the winners in that movement. … Our whole approach is to be a network of networks for fintechs."

He said Visa is looking to accomplish this by building a robust ecosystem in which it pays a central role. And he said his own vision is for Visa to achieve the same level of preeminence as Stripe.

"You know every startup that goes to Y Combinator, if they're going to launch an ecommerce business, they're default Stripe," he said. "There's enough evidence that that's the right choice. We want to be the default network for fintechs who are thinking of issuing a Visa credential, moving money, pushing payments to a card. … It's about building an ecosystem, so that it's easy for those companies to work with Visa."

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