Square is continuing its global expansion by scooping up Afterpay, a fintech service with particular potential in the Asia-Pacific market.
Fintech company Square announced on Sunday (1 August) that it is acquiring the Australian ‘buy now, pay later’ (BNPL) service Afterpay in a deal worth $29bn. The deal is to be paid in all stock.
Afterpay’s BNPL service allows users to pay for items in four instalments over six weeks with no interest fees. The service has more than 16m consumers and operates with nearly 100,000 merchants globally, including retailers in fashion, homeware and beauty products.
Square stated that it plans to integrate Afterpay into its existing seller and cash app business units, offering BNPL for a wide variety of retailers while allowing users to manage their payments.
“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, 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 has a Dublin office and recently expanded its services into Ireland. The San Francisco-headquartered company also has offices in the US, Canada, Japan, Australia and around Europe.
Ravi Sharma, lead banking and payments analyst at data and analytics company GlobalData, commented that the Covid-19 pandemic has resulted in an increased demand for BNPL services. BNPL giant Klarna has raised more than $1bn in recent months and is now valued at $45.6bn, while London-based competitor Zilch raised $80m earlier this year.
“Buy now and pay later has been gaining prominence in Asia-Pacific with large number of payments and fintech companies looking to get a slice of this market,” Sharma said. “Square’s announcement to acquire Afterpay is the latest development in this space, as it looks to expand into the growing BNPL market.”
Sharma added that the rapidly growing e-commerce market has “further accelerated the demand” for BNPL. According to GlobalData, Australia’s e-commerce market is forecasted to grow from $46.7bn in 2021 to $70.5bn in 2025.
“With consumer spending gradually recovering from the Covid-19 pandemic, BNPL presents huge potential not just in Asia-Pacific but other regions globally. The acquisition of Afterpay will help Square expand in new geographies by leveraging Afterpay’s robust customer and merchant base.”