By Adedapo Adesanya
Leading United States digital payment platform, Square, founded by Twitter Chief Executive Officer, Mr Jack Dorsey, has announced the acquisition of Australia’s Afterpay Limited for $29 billion.
Afterpay specializes in the “buy now, pay later” model that offers users staggered payments, often without extra charge.
The plan is for Square to integrate Afterpay into both its consumer Cash App and its Seller product for small businesses, which could allow smaller merchants to offer staggered payments at checkout as well.
Afterpay lets consumers purchase items on credit and pay later with a series of instalments. It is particularly popular with younger consumers, who may not have a credit card, to buy clothes, beauty products and homewares since there are no fees or interest on the loan as long as people pay on time.
The fintech application is available in Australia, the United States and Canada, as well as the United Kingdom, France and Italy. It has 100,000 suppliers worldwide and boasts 16.2 million customers.
The merger and acquisition, which is expected to close in the first quarter of 2022, will be done entirely through an exchange of shares and will value Afterpay at approximately $29 billion, according to a joint statement.
After completion of the deal, which offers a 30 per cent premium on Afterpay’s share price at closing Friday, shareholders will own 18.5 per cent of the new company’s capital.
“The acquisition aims to enable the companies to better deliver compelling financial products and services that expand access to more consumers and drive incremental revenue for merchants of all sizes,” the two groups said in the statement.
“Square and Afterpay have a shared purpose. We built our business to make the financial system more fair, accessible, and inclusive,” Mr Dorsey said in the statement, where he serves as the CEO of Square, which operates the mobile payment platform Cash App.
The deal is projected to also help boost Cash App’s total user base by adding Afterpay’s 16 million users to Cash App’s existing user base of 70 million annual users.
According to Afterpay co-founders, Messrs Anthony Eisen and Nick Molna, “the transaction marks an important recognition of the Australian technology sector as homegrown innovation continues to be shared more broadly throughout the world.”
