Visa Halts Open Banking Services in the U.S.

Visa has chosen to stop its open banking services in the United States. The decision comes amid ongoing uncertainties regarding consumer data rights and the potential for heightened fees related to accessing customer information, as reported by Bloomberg.

The company was working on an initiative to enhance access to consumer account data for third parties, including fintech companies, but has now suspended this effort.

Sources familiar with the matter, who wished to remain anonymous due to its sensitive nature, confirmed the discontinuation of the project. This development occurs at a time when the regulatory landscape, especially regarding fees that banks can impose for data access, remains unclear.

Previously, during the Trump administration, the Consumer Financial Protection Bureau sought to overturn certain open banking regulations that mandated banks to share customer data for free with other financial service providers. Currently, this agency is trying to adjust those rules.

A Visa spokesperson, when asked about this decision, mentioned that the company is now focusing its open banking initiatives on markets that show more promise, such as Europe and Latin America. In a revenue call last July, CEO Ryan McInerney indicated these regions offer significant opportunities for open banking growth.

Visa’s exit from the U.S. market coincides with JPMorgan Chase’s announcement about implementing fees that could total hundreds of millions of dollars for accessing customer bank account data. This has sparked criticism from fintech firms that depend heavily on such data.

One source noted that Visa’s decision was made independently of JPMorgan’s fee strategy. It’s interesting to consider this, especially when you think back to Visa’s move five years ago when they attempted to acquire Plaid, a company that connects bank accounts with fintech applications, for $5.3 billion. That deal fell apart in 2021 due to antitrust concerns raised by the U.S. Department of Justice.

Later, Visa did acquire Tink, a competitor to Plaid based in Sweden, paying around $2 billion for it that same year. The executives at Visa expressed that Tink would be a significant asset in driving open banking innovation.