Square acquires Afterpay as BNPL space heats up
Square, the fintech giant, has announced that it would be acquiring all the shares of the Australian BNPL giant Afterpay in a deal that is expected to be worth $29 billion.
Square is a surprise entry into the BNPL segment and though its timing might be a bit late, it has managed to leapfrog a lot of its competitors by this major acquisition which will give it immediate access to a lot of users and features that Afterpay has built up over the years.
“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 Jack Dorsey, Co-Founder, and CEO of Square. “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.”
Square plans to integrate the Aftrepay features onto its Seller and Cash App platforms which means that even the smallest of merchants, of which there are many, would be able to provide the BNPL features for their users at checkout and the consumers would be able to manage all their installment payments on the Cash App itself.
“The addition of Afterpay to Cash App will strengthen our growing networks of consumers around the world while supporting consumers with flexible, responsible payment options,” said Brian Grassadonia, Lead of Square’s Cash App business. “Afterpay will help deepen and reinforce the connections between our Cash App and Seller ecosystems, and accelerate our ability to offer a rich suite of commerce capabilities to Cash App customers.”
The BNPL segment has been hot over the last few months with several major companies including Paypal and Apple foraying into this space during this period. They have realized the need for the new generation of users to pay for large products in installments so that it would ease the payment pressure on them and that is the reason why there is such demand in the BNPL space. It helps to increase demand for the products as users love this convenience and it also sits well with the growth of the online purchase segment where returns and refunds are a common occurrence. This process flow would make refunds and returns easier and hence the demand that we have been seeing both from users and the fintech firms as well.