Square to acquire Afterpay for $29B, sweetening offer for merchants and consumers

Payments fintech Square this weekend said it plans to acquire ‘buy now, pay later’ (BNPL) firm Afterpay in a $29B all-stock deal, allowing it to enhance its relationships with sellers and consumers.

Why should we care?
Square says Afterpay will serve two critical goals through integration within seller and Cash App business units: it will allow even the smallest of Square merchants to integrate BNPL at checkout; and it will offer consumers BNPL offerings through Cash App. In what amounts to a shot across the bow to rival Venmo (owned by PayPal), Cash App consumers will also be able to discover merchants within the Cash App and pay via built-in BNPL functionality. “I’ve never seen a combination [of businesses] that has such potential to deliver extraordinary value to consumers and merchants. Even more so than eBay + PayPal,” one Afterpay investor said. By fusing Afterpay and Square – which each have tens of millions of customers – Square will create a powerful ecosystem that will bring together consumer and merchant payment networks. With Afterpay, Square will compete with other major BNPL players like Klarna and PayPal, but the parties that perhaps should be most concerned with this development are legacy banks. Square’s recently-launched business banking offering, alongside these robust payment capabilities, means its platform could become more attractive to businesses looking to move away from old-guard banks.