Visa and Plaid scrap $5.3 billion merger agreement

New York(CNN Business) Visa and fintech startup Plaid have terminated their $5.3 billion merger agreement after facing a legal challenge from the Department of Justice.

The proposed deal was announced a year ago, but in November the DOJ sued to block the acquisition on antitrust grounds.

In a statement announcing merger's end Tuesday, Visa CEO Al Kelly cited "protracted and complex litigation" that would take "substantial time to fully resolve."

The companies said the DOJ agreed to drop its lawsuit.

Kelly said he was confident Visa would have ultimately won the legal battle for the deal, and that he believes Plaid's capabilities as "complementary" and "not competitive."

Plaid makes digital infrastructure linking financial data from people's bank accounts to the apps they use to manage their money such as Venmo, Coinbase and Expensify.

"This past year saw an unprecedented uptick in demand for the services powered by Plaid, and our priority is to support the hundreds of millions of people who now rely on fintech," said Zach Perret, CEO and co-founder of Plaid, in a statement.

In its lawsuit, the DOJ alleged that Visa is a "monopolist in online debit transactions," and a new service in development by Plaid could pose legitimate competition to Visa's business.

Plaid says that although the two companies would have been a "great combination," it will now work with Visa as an investor and partner to "fully focus on building the infrastructure to support fintech."

-- CNN Business' Clare Duffy contributed to this report.