Financial services firm Square is reportedly in talks to purchase Credit Karma’s tax-preparation division. Details about the potential sale have not yet been divulged.
It is believed that any decision taken by Credit Karma to sell its tax-preparation unit would be influenced by a potential antitrust case being explored by the US Justice Department. Credit Karma is currently in the process of being purchased by Intuit, producers of the TurboTax software, in a $7.1bn deal.
The Justice Department is concerned that the amalgamation of Credit Karma and TurboTax would leave consumers with less choice in terms of their tax filing solutions, which has rung alarm bells with competition regulators. The sale of Credit Karma’s tax unit to Square, therefore, could help appease law-makers.
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Competition heats up
Even if the sale of Credit Karma’s tax-preparation division to Square does go ahead, Intuit will still be making an impressive acquisition. Credit Karma currently has more than 100 million users that access its free credit score checking system.
“By agreeing to acquire Credit Karma, a company with nearly $1 billion in unaudited revenue in calendar year 2019, up 20% from the previous year, Intuit accelerates its mission of powering prosperity around the world,” an Intuit press release read at the time of the acquisition’s announcement.
“The combination brings together two technology leaders with a shared goal to help solve the personal finance problems that consumers face today, regardless of their financial situation -- managing debt, maximizing savings, access to better credit cards and loans -- with an aim to put more money in consumers’ pockets.”
Square, which was founded by Twitter CEO Jack Dorsey in 2009, could make use of Credit Karma’s tax solution to boost its financial management offering. A limited number of tax management settings are already available through the company’s app and online dashboard.
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