Square Announces Plans to Acquire Australian Buy-now-pay-later (BNPL) Giant Afterpay

Square is all set to buy Australian BNPL darling Afterpay for $29 Bn in stock. The transaction is predicted to complete by the end of the first quarter of 2022. Upon completion, Square will then appoint one of Afterpay’s directors to join its board. 

The price is set based on the closing price of Square’s common stocks on the 30th of July that was $247.36. 

This is another major deal Square has been involved in this year. It announced that it had purchased a majority stake in Tidal’s streaming service earlier this year. 

SEE ALSO: Stripe Issuing Launches in 20 European Countries

Buy Now Pay Later Services Garner Consumer Interest

BNPL services offered by companies such as Affirm, Klarna, and Afterpay are becoming quite popular across the world. Due to this, a lot of companies have shown great interest in the BNPL space. 

Apart from Square, reports are suggesting that even Apple is currently working toward developing a similar service. The service is called “Apple Pay Later”.

According to Oliver Yu, Analyst at CB Insights, the e-commerce part of BNPL was well-equipped to deal with the pandemic. He said that in-store shopping capacity took a major hit due to the lockdowns, so BNPL came as a blessing for merchants. 

Merchants from around the world could use BNPL services to make sales. Even retailers such as Macy’s, Peloton, and Sephora turned to buy now pay later services to boost demand.   

Afterpay has an impressive customer base of around 16 million users and around 100,000 merchants around the globe. 

Challenges for Afterpay

Despite its impressive growth, the road ahead is not easy for Afterpay. One of the main reasons for this is the increasing number of BNPL products in the market. 

Today, a lot of companies are focusing on the development of BNPL products, which has increased competition in the market. 

For example, PayPal created a BNPL product called “Pay in 4”. Besides, Klarna, another popular payment company,  has backing from China’s Alibaba Group. 

Chinese companies such as Tencent and Baidu have also included BNPL features in their e-commerce products. Even credit card companies and banks have started finding solutions to wave off the threat from BNPL to their revenue streams. 

Another barrier is regulatory. Since BNPL does not comply with the traditional definition of consumer debt, there is still ambiguity around it. 

Will Square continue its acquisition spree? Will this move change the BNPL landscape? 

Leave your comments below and tell us what you think!

SEE ALSO: PayPal Announces Launch of Omnichannel Solution PayPal Zettle in the U.S.

Image Source: Square

Karandeep V

Karandeep was born in Pune, Maharashtra, an upcoming metropolitan city in the Western region of India. While most members of his family are engineers, he had different ideas. He was more inclined toward exploring the non-technical aspects of a business, which is why he studied Bachelors of Business Administration at Symbiosis International University, Pune.  Having said that, his love for new and upcoming technologies remained intact, which is why he has written extensively about technology throughout his career. After a brief stint with a gaming company at the beginning of his career, he discovered that his love for writing was not temporary.  Being a tech geek, he always liked installing and playing around with new applications on his mobile devices and the home desktop. He was fascinated by how technology can simplify even the most mundane and complex tasks with just a few commands. He keeps a close eye on how businesses use different tools to streamline their operations to boost productivity and efficiency.  At ToolsMetric, he writes product reviews that cover the main features and specifications of different enterprise applications. The sheer amount of innovation and hard work that goes into building these tech solutions is one of the reasons why Karandeep loves reviewing these tools. Besides product reviews, he also writes interesting news articles and blogs that track the latest developments in the tech industry.  When he is not writing, you can find him rooted to his seat playing video games, watching movies, or supporting his favorite football team. Since his childhood, he has always loved to travel and explore new places. Traveling is a major part of his life due to a myriad of reasons such as experiencing new cultures, food, and traditions. His other hobbies include playing football, cooking, and running.  You can find him on LinkedIn here.

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