Payments fintech Square announced its intention to acquire Buy Now, Pay Later (BNPL) firm Afterpay for $29 billion. BNPL was the least important part of the deal.
Payments fintech Square announced its intention to acquire Buy Now, Pay Later (BNPL) firm Afterpay for $29 billion in an all stock transaction. Square’s press release quotes Square CEO Jack Dorsey as saying: “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.” OK, whatever you say Jack. The real reason was contained in Dorsey’s next comment: “Together, we can better connect our Cash App and Seller ecosystems to deliver even more compelling products and services for merchants and consumers.” The BNPL space has generated a ton of press over the past year as consumer purchases around the world have moved online and consumers look for ways to make it easier to buy what they want without incurring more debt on credit cards. In the first quarter of its 2021 fiscal year, Afterpay generated $4.1 billion in sales from 11.2 million active customers, who purchased from 63,800 active merchants. With 3.4 million customers in the ANZ region, Afterpay has penetrated roughly 14% of the market. In the US, Afterpay’s market penetration is just 2.5%, despite having nearly twice as many customers as there are in ANZ. In the UK, Afterpay counts 2.2% of US adults as customers. Average sales per customer is more than twice as high in ANZ as it is in either the US or UK.
