Square has announced that it plans to pay $29 billion in stock for Afterpay, an Australian service that lets you pay for purchases over time with no interest, The Verge has reported. Square, led by Twitter co-founder Jack Dorsey, has already purchased a majority stake in Tidal and launched a new Bitcoin business in 2021.
In a press release, Square called Afterpay "the pioneering global 'buy now, pay later' (BNPL) platform." Afterpay notes that it has over 16 million customers worldwide and services nearly 100,000 resellers across retail markets like "fashion, homewares, beauty, sporting goods and more."
"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 Square's Brian Grassadonia. "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."
Afterpay, like other increasingly popular BNPL services (including Affirm, Klarna and Uplift), allows customers to pay over time without interest. To make money, they charge retailers a fee (4 to 6 percent), promising to connect them with a desirable demographic and assume all financial risk. In Square's press release, Afterpay also said it can help "drive repeat purchases [and] increase average transaction sizes."
One of the world's largest retailers, Apple, is reportedly planning to offer its own buy now, pay later type program directly to consumers. Much like PayPal's "Pay in 4" service, "Apple Pay in 4" would allow Apple Wallet users to stretch purchases out to four payments, interest-free. Square's purchase of Afterpay, meanwhile, is expected to close in the first quarter of 2022.