CEO of Square (NYSE: SQ) Jack Dorsey announced plans to acquire Australian buy now, pay later (BNPL) startup Afterpay in a $29 billion deal.
Particularly well known for its famous Cash App, Square announced intentions to integrate Afterpay into its existing apps as the enormous acquisition looks set to help the company expand its worldwide payments empire.
Afterpay was created in 2015 and launched in the United States in 2018; it is one of the most well-known firms in the buy now, pay later industry. Square claims that its platform is used by 100,000 merchants worldwide and that it has more than 16 million users.
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The app allows users to divide retail and online payments into installments; by illustration, the integration will enable “even the smallest of merchants” to provide purchase now and pay later options at the checkout, among other things.
BNPL apps gain in popularity
Such services have gained in popularity to reach out to younger consumers and keep up with the pandemic’s quick transition to online shopping. Payment experts have identified the common trend amongst Millennials and Generation Z, who are apprehensive about incurring credit card debt.
Square anticipates the all-stock acquisition to conclude in the first quarter of 2022. The purchase is Square’s largest-ever and the greatest ever made by an Australian firm, as per the overview of the transaction.
The Twitter co-founder stated that Square and Afterpay have a “shared purpose,” he confirmed:
“We built our business to make the financial system more fair, accessible, and inclusive, and Afterpay has built a trusted brand aligned with those principles <..> Together, we can better connect our Cash App and Seller ecosystems to deliver even more compelling products and services for merchants and consumers, putting the power back in their hands.”
The credit card as a payment option has faced increased competition for market share from new and creative payment structures in recent years.
Afterpay set to expand in the U.S.
As a result of the arrangement, Afterpay will be able to expand more swiftly in the United States. Revenues in the United States virtually tripled during the period to $8.15 billion, according to the company’s most recent annual report.
At the same time, Square reported second-quarter profits, revealing that gross profit increased 91% year on year to $1.14 billion.
Anthony Eisen and Nick Molnar, co-CEOs of Afterpay, stated that:
“By combining with Square, we will further accelerate our growth in the U.S. and globally, offer access to a new category of in-person merchants, and provide a broader platform of new and valuable capabilities and services to our merchants and consumers.”
Since the BNPL applications are essentially a credit card solution tailored for the 21st-century shopper, Square’s latest deal comes as no surprise.
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