Visa plans to acquire FinTech Startup Tink for over $2 Billion.

After their failed acquisition of Plaid, Visa is trying to acquire a new company to dive into the open banking space.

(image credit: pymnts.com)

What is Tink?

Tink is at the forefront of FinTech, leading the “open banking” movement with momentum. Tink's software lets banks and fintech firms access banking data to create new financial products. Having the ability for customers to access financial data only established banks could in the past and to use it all in one product is truly powerful. It is so powerful that the Swedish company raised over $103 million dollars in funding back in December, with an $825 million valuation. At that time, Tink already had 3,400 banks using its banking platform service and over 250 million customers, mainly in Europe, and another 8,000 developers creating financial products using Tink’s software. Tink also has a vast array of partners supporting its platform, with PayPal, NatWest, ABN AMRO, BNP Paribas, Nordea, and SEB publicly supporting the company with some of which participating in strategic investment. Since that round of funding, Tink has doubled down on expanding its network of banks and payment services in Europe. Daniel Kjellén, co-founder and CEO of Tink, said in a statement:

“Despite the difficulties of 2020, it was a year of great growth for Tink. 2020 has seen payments powered by open banking take-off, and in 2021 we expect to see this scale – most prominently in the UK, followed by Europe. This funding extension will further facilitate the development of our payment initiation services across Europe while continuing to deliver new data-products built on open banking technology to our customers.”

What does the acquisition mean for Visa?

Visa has announced plans to acquire Tink for €1.8 billion, or $2.15 billion at today’s exchange rate. Originally, Visa planned to spend $5.3 billion to acquire the American startup Plaid, a similar fintech company that acts as an intermediary link between your bank account and financial apps. However, the company had to call off the acquisition after running into a regulatory wall delivered by the Department of Justice in November of 2020. As the most prominent card network in America, Visa is buying the financial-technology company to establish itself in Europe’s fast-growing open banking market, thanks to new open banking regulations set in January of this year. The upcoming widespread adoption of open banking has the potential to create an alternative to the debit and credit card networks that dominate the payment world today. The acquisition of Tink is a sign that Visa is taking precautions and is preparing for this scenario while also attempting to assert itself as a dominant force in the European market, according to Hiroki Takeuchi, the founder of London-based startup GoCardless Ltd., which operates a bank-debit network to rival credit and debit cards.

“These open banking initiatives are gaining maturity and momentum very quickly,, and they are going to become a real alternative to the card infrastructure and the card networks,” Mr. Takeuchi said.

This move by Visa comes just a week after JPMorgan Chase & Co. agreed to buy digital wealth manager Nutmeg Saving and Investment Ltd. for about $1 billion as it pushes to establish a digital retail banking presence in the U.K. As the race continues for open banking dominance in Europe, Investors will have to see how the effects will be felt in America and worldwide.