DoJ Okays Intuit’s Credit Karma Acquisition, Credit Karma Tax Sale to Square
Back in February, Intuit announced plans to purchase the free credit score site Credit Karma for a whopping $7.1 billion. However, as always, the deal was subject to regulatory approval. Now, the company has revealed that it’s entered into a consent decree with the U.S. Department of Justice as well as an Assurance of Discontinuance with the New York State Attorney General. As a result, the path is now cleared for the transaction following customary closing conditions.
Also announced alongside this update is the news that the Credit Karma Tax — a free tax prep and filing platform — will indeed be sold to Square for $50 million in cash. This transaction will be contingent on the Intuit-Credit Karma deal closing. Previously, it was reported that the service was a sticking point for regulators who feared that the option would be discontinued under Intuit’s control. According to Square, it seems that the tax prep tool will be worked into the company’s Cash App, which currently offers peer to peer payments, the ability to buy and sell Bitcoin, stock trading, and more.
The acquisition will bring together two large FinTech companies. Intuit — best known for their TurboTax and Quickbooks software — currently has 57 million customers. Meanwhile, Credit Karma reports more than 110 million users across the United States, Canada, and the United Kingdom.
In a press release announcing the latest developments, Intuit CEO Sasan Goodarzi said of the update, “We are very excited to reach this important milestone today. This brings us one step closer to transforming personal finance by making it simpler for consumers to find the right financial products, put more money in their pockets, and provide financial expertise and advice.” Additionally, Credit Karma founder and CEO Kenneth Lin said of joining with Intuit, “Together with our trusted brands, customer scale, as well as our data and AI platforms, we will achieve more than either company could on its own.” Both leaders also addressed the sale of Credit Karma Tax to Square, with Lin adding, “We are pleased to have accomplished our goal of addressing any potential regulatory hurdle and proud we’ve found a partner for the Credit Karma Tax business.” Meanwhile, Cash App Lead Brian Grassadonia said of Square’s purchase, “We created Cash App to provide more access to the masses of people left out of the financial system and are constantly looking for ways to redefine our customers’ relationship with money by making it more relatable, instantly available, and universally accessible. That’s why we’re thrilled to bring this easy-to-use tax product to customers as we continue to build out the suite of tools Cash App offers.”
While it looks as though this FinTech acquisition will come to fruition, another continues to look in doubt. Earlier this month, the Justice Department filed suit to block Visa’s planned takeover of Plaid. As the agency explained in its suit, “By acquiring Plaid, Visa would eliminate a nascent competitive threat that would likely result in substantial savings and more innovative online debit services for merchants and consumers.” Visa’s purchase of the API used by such apps as Robinhood, Venmo, and others was originally announced in January and carries a price tag of $5.3 billion.
Overall, the latest news from Intuit, Credit Karma, Square, and the Department of Justice seems to be filled with wins on all sides. For Intuit, the purchase of Credit Karma will bring millions of new users into their ecosystem, presenting them with plenty of upsell opportunities. At the same time, consumers will continue to have a free tax prep option that competes with Intuit’s paid tools as (the presumably set to be renamed) Credit Karma Tax ends up in the capable hands of Square. With that, it seems that it will only be a matter of time before this major FinTech deal is done.