The two companies announced that Square plans to buy Afterpay, an Australian company that offers a “buy now, pay later” service that allows customers to pay for products in interest-free installments, for $29 billion in stock.
Square intends to purchase Afterpay in order to grow further into the expanding installment lending market.
This is Square’s latest major step, following the announcement of a Bitcoin business unit and the purchase of a majority interest in the Tidal streaming service earlier this year.
According to a press release, Afterpay already serves more than 16 million customers and nearly 100,000 merchants in over 100 countries around the world. In the first quarter of 2022, Square and Afterpay anticipate that the transaction will be finalized.
Following the completion of the acquisition, Square will appoint an Afterpay director to serve on the board of directors of Square.
“Square and Afterpay are working together toward a common goal. Square co-founder and CEO Jack Dorsey said in a statement that the company was founded to make the financial system more fair, accessible, and inclusive.
Afterpay has built a trusted brand aligned with those principles, Dorsey said in the statement.
By working together, we can better connect our Cash App and Seller ecosystems, enabling us to deliver even more compelling products and services to merchants and consumers, reclaiming control for them, Dorsey added.”
Online payment services such as Afterpay, Affirm, and Klarna have become increasingly popular as the internet has grown in popularity.
Apple is reportedly working on a similar service, which is internally referred to as “Apple Pay Later,” which would compete with Square. And Square may not be the only payments behemoth to enter the fray.
Customers can pay in four interest-free installments through Afterpay, and they will be charged a fee if they fail to make an automated payment.
When it becomes available, Cash App’s 16 million customers will be able to manage installment payments directly from their phones.
The closing of the transaction is expected to take place in the first quarter of 2022.
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