Square bets on Gen Z with Afterpay purchase
Square, Inc. has announced an all-stock deal to acquire payments startup Afterpay
Payments startup Square has agreed to acquire Afterpay, the global ‘buy now, pay later’ (BNPL) platform, in an all-stock deal worth $29m.
The acquisition will accelerate Square’s plans to move into the BNPL sector as consumers continue to rely on flexible payment methods.
Founded in 2014 by co-founders Anthony Eisen and Nick Molnar, Afterpay serves more than 16 million consumers worldwide and allows shoppers to split the price of their digital purchases into four instalments with no interest upfront (a late fee is applied if payments are missed). The move is set to be one of Australia’s biggest fintech acquisitions.
The acquisition sends a clear signal to payment firms, indicating that the e-commerce boom is expected to continue as consumers rely on digital purchases.
A recent study by Ascent shows that 55% of US consumers have used a BNPL service, up 37% from July 2020, with the usage growth largest in the 18 to 24 and 55+ age groups. A total of 64% of BNPL users have used the service, increasing since the beginning of the pandemic.
Failing to make repayments on BNPL loans, however, results in hefty late fees. Consumers aged 18 to 24 are “most likely to land in this boat, with 47% being late and/or getting slapped with a fee”.
Square CEO Jack Dorsey, who is also the founder and CEO of Twitter, believes that Square and Afterpay have a shared purpose.
“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,” Dorsey said in a company statement.
“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,” he added.
Eisen and Molnar believe that the acquisition will further accelerate the company’s growth in the US and provide a broader platform of new and valuable services to merchants and consumers.
“We are fully aligned with Square’s purpose and, together, we hope to continue redefining financial wellness and responsible spending for our customers,” commented Eisen and Molnar.
“The transaction marks an important recognition of the Australian technology sector as homegrown innovation continues to be shared more broadly throughout the world,” they added.