Jack Dorsey’s payments company Square announced it has acquired Australian buy now pay later (BNPL) fintech company Afterpay for $29 billion. In an announcement on Sunday, AfterPay said Square has agreed to acquire all of the issued shares in Afterpay by way of a recommended court-approved Scheme of Arrangement.
The acquisition brings together two of the fastest-growing global fintech companies to advance the shared mission of economic empowerment and financial inclusion.
“Square and Afterpay have a shared purpose,” said Square’s CEO Dorsey in a statement. “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.”
Buy now, pay later (BNPL) is a new payment option that allows consumers to receive their purchase right away (Buy Now), either online or in-store and then pay (Pay Later) for their purchase in installments.
The BNPL model has attracted millions of money-conscious shoppers with seamless delayed payment alternatives that bypass the usual credit fees and cut-throat interest rates charged by credit card companies. In the U.S, the opportunities for BNPL as consumers and banks appetite for credit shrinks.
Founded in 2014 by Nick Molnar and Anthony Eisen, the Melbourne, Australia-based Afterpay is a BPNL company that allows shoppers to receive products immediately and pay in 4 simple installments. Afterpay allows you to buy a product online or in-store and pay for it in four installments.
As of June 30, 2021, Afterpay serves more than 16 million consumers and nearly 100,000 merchants globally, including major retailers across key verticals such as fashion, homewares, beauty, sporting goods and more. Afterpay empowers consumers to access the things they want and need, while allowing them to maintain financial wellness and control.
The BNPL market currently accounts for only a small portion of overall card spending. However, with the coronavirus pandemic-fueled e-commerce boom, this alternative model of financing may be poised to disrupt the $8 trillion US payment card industry.
Afterpay also assists merchants in growing their businesses by helping to drive repeat purchases, increase average transaction sizes, and provide their buyers with the ability to pay over time. Afterpay is deeply committed to helping people spend responsibly without incurring service fees for those who pay on time, interest, or revolving debt, and supports consumers in a number of countries across APAC, North America and Europe (including under its Clearpay brand).
“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. We are fully aligned with Square’s purpose and, together, we hope to continue redefining financial wellness and responsible spending for our customers,” said Anthony Eisen and Nick Molnar, Afterpay Co-Founders and Co-CEOs.
Molnar added: “The transaction marks an important recognition of the Australian technology sector as homegrown innovation continues to be shared more broadly throughout the world. It also provides our shareholders with the opportunity to be a part of future growth of an innovative company aligned with our vision.”