Blocked in Its Bid for Plaid, Visa Agrees to Acquire European Open-Banking Player Tink

In a deal that underscores the crucial importance of open banking in payments, Visa Inc. early Thursday said it has agreed to pay $2.15 billion to buy Tink AB, a 9-year-old, Stockholm-based company whose network connects to 3,400 financial institutions throughout Europe.

The agreement comes five months after Visa abandoned its effort to acquire Plaid Inc. , a U.S. data aggregator. Visa had agreed to pay $5.3 billion for Plaid but the deal was stymied by the U.S Department of Justice, which feared the card network could use Plaid’s banking links to establish control over the U.S. debit business. Visa denied the allegation. Open-banking operators build links to consumer accounts at banks to allow fintechs and other financial-services firms to verify funds availability and, in some instances, move money.

While the European context is very different from that in the United States, some observers see the Tink deal as bolstering Visa at a time when payments competition in Europe is heating up. “I like the strategy,” says Eric Grover, principal at Minden, Nev.-based consultancy Intrepid Ventures and a close observer of the European payments market. “European authorities want to promote open banking. This will do it.”

Through its connections and application programming interfaces, Tink reaches 250 million bank customers across Europe, Visa said in its announcement, adding that the company serves some 300 clients, including banks and fintechs. Besides gaining these assets, Visa through the acquisition will also positions itself to tap into banks’ legally mandated efforts to join in open-banking ventures. By law in the European Union, banks must allow customers to have access to registered third-party providers.

While the deal is unlikely to run into the legal complications that the scuttled Plaid agreement encountered in the U.S. market, it may well serve another purpose for Visa, according to Grover. He argues the acquisition will bolster Visa in the European market in advance of the expected launch next year of the European Payments Initiative, a rival retail payment network run by a consortium of 31 banks and two third-party acquirers across the continent.

“Anything that makes Visa stronger is going to make the EPI’s already daunting challenge to find a path to critical mass even more daunting,” Grover says, referring to the Tink announcement.

Tink’s valuation in 2020 came to $824 million, up from $270 million the year before, according to a report on the deal from Robert Napoli, an analyst at William Blair & Co. Investors in Tink include PayPal Holdings Inc., according to the report.