Square to Buy Australian Fintech Afterpay in $29 Billion Deal
Square, a cryptocurrency-friendly digital payments company, announced the acquisition of Australian fintech firm Afterpay in a $29-billion all-stock deal. The transaction is expected to close in Q1 2022.
Jack Dorsey’s digital payments firm is expanding competition with payment industry behemoths like PayPal and American Express by acquiring a major Australian lending company. Square aims to reach consumers who are shifting away from traditional credit, such as younger buyers, and offer them installment loans.
On August 1, Square announced that the firm had started a scheme implementation deed to purchase all of the shares issued in Afterpay in a $29 billion deal. The total cost marks a roughly 30% premium on the Australian fintech’s last closing price. It represents Square’s largest acquisition to date.
“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,” said Dorsey, Square’s co-founder, and CEO.
As the “buy now, pay later” (BNPL) trend gets more popular, this acquisition will allow Square to enhance its payment ecosystem further. The Francisco-based company is looking to make Afterpay a part of its Cash App and Seller products, thus enabling them to offer a BNPL service.
“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,” Dorsey added.
BNPL transactions allow customers to pay their bills in small portions over a fixed period of time. Also referred to as installment loans, these transaction types are no longer reserved for big-ticket purchases. They are now offered by global financial companies such as Klarna, Mastercard, PayPal, and Citi.
According to Square’s announcement, this integration will provide small businesses with an opportunity to offer BNPL solutions at checkout while allowing Afterpay consumers to manage their installment loan payments through the Cash App.
I have always thought of myself as a writer, but I began my career as a data operator with a large fintech firm. This position proved invaluable for learning how banks and other financial institutions operate. Daily correspondence with banking experts gave me insight into the systems and policies that power the economy. When I got the chance to translate my experience into words, I gladly joined the smart, enthusiastic Fortunly team.
