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Visa $2 bln EU fintech deal has ominous precedent

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A Visa credit card is seen on a computer keyboard in this picture illustration taken September 6, 2017. REUTERS/Philippe Wojazer/Illustration//File Photo

LONDON, June 24 (Reuters Breakingviews) - It doesn’t take Visa (V.N) Chief Executive Al Kelly long to bounce back. Months after abandoning the $5.3 billion acquisition of Plaid, under pressure from U.S. competition authorities, he has agreed a 1.8 billion euro ($2.1 billion) deal to buy Sweden’s Tink, effectively the European equivalent. Both companies built software that lets users see their bank account balance and move money around without logging directly into a banking app. That’s a threat to Visa, since people could in theory pay for goods and services via account transfers rather than cards.

The U.S. Justice Department concluded Visa wanted to squelch a nascent challenge to its payments monopoly. Kelly may hope that European authorities will take a different view, since so-called open banking laws allow competitors to emulate Tink. But if rivals can replicate the startup’s technology, why is Visa paying an eyeball popping price of 60 times December’s annual recurring revenue? Kelly’s second M&A attempt may have the same result. (By Liam Proud)

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Editing by Ed Cropley and Karen Kwok

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