sign up log in
Want to go ad-free? Find out how, here.

Buy now, pay later service provider Afterpay set to be acquired by Jack Dorsey's Square in major payments sector acquisition

Buy now, pay later service provider Afterpay set to be acquired by Jack Dorsey's Square in major payments sector acquisition

US payments company Square is seeking to acquire Australian buy now, pay later (BNPL) service provider Afterpay for about US$29 billion, or A$39 billion, in a deal backed by Afterpay's board.

Afterpay shareholders would be paid in Square shares. Regulatory approvals required for the deal include one from New Zealand's Overseas Investment Office. Afterpay operates in NZ, Square currently doesn't.

The deal would enable the San Franciso-based Square, whose co-founder and CEO is Twitter co-founder Jack Dorsey, to expand into consumer lending. 

Square's products include CashApp,which allows users to send and receive money for free through a mobile application, and Square Point-of-Sale, a free application that lets merchants process payments via smartphone. 

BNPL services allow consumers to purchase and obtain goods and services in-store or online immediately, but pay through installments over time.

While there are no interest charges, there are penalty fees for late payments. You can see details on all New Zealand's buy now, pay later service providers here.


Supporting us gets rid of ads. Find out more.


Square says it plans to integrate Afterpay into its existing Seller and Cash App business units, enabling "even the smallest" of merchants to offer BNPL services. Afterpay's co-founders and co-CEOs, Anthony Eisen and Nick Molnar, will join Square assuming the deal is completed.

Based on Square's July 30 closing share price, the deal values Afterpay at about A$126.21 per share, a premium of 31% to Afterpay's last closing price of A$96.66. The deal is structured as a Scheme of Arrangement, and is expected to close in the first quarter of 2022. Around midday Australian Eastern Standard Time, Afterpay's shares were up almost 24% at A$119.760.

There's more on the deal here, and an investor presentation here.

We welcome your comments below. If you are not already registered, please register to comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

10 Comments

No interest charges. Easy fix. Up the capital cost.

Up
0

I don't think you get it.

Up
0

I'm pretty sure that Afterpay doesn't make any money even in a super low cost of capital environment that we have been in. Still, you gotta give it to the founders who have created a squillion dollar business based on never making a profit!

Up
0

My understanding is the real value is in the data they collect, rather than any fees.

Up
0

I think we already have enough companies out there collecting data. Its time people stopped using crap like this.

Up
0

If you pay on time its far better product than Visa/Mastercard..the kids love it as all the costs go back on the retailer.

Up
0

Agree. Data is of no use, if a company cannot make profit out of the sales/operations.

Up
0

Did Square pay in 4 easy weekly instalments?

Up
0

It's about capital recycling.

Traditional banks make money by earning the difference of interest between what they charge to borrowers (mortgage holders), versus what they pay to depositors (savers). Most banks make a net interest margin of ~2% per annum.

But what the banks earn in a year, Afterpay makes in six weeks. Customers are required to repay Afterpay over 42 days (six weeks), and Afterpay makes the same amount of commission even if they decide to pay it earlier.

https://www.smartcompany.com.au/finance/afterpay-margin-jason-andrew-pr…

Up
0

Square in a Round Hole ? Afterpay(ing) what is in store for Square ? Markets may still punish it for overpaying for AfterPay.

Up
0