Earlier this morning, fintech giant Square announced that it has struck a deal to acquire Australia-based AfterPay for a whopping $29 billion.
Square is acquiring the company in an all-stock deal, the final transaction will take place in the first quarter of 2022. The company wants to integrate AfterPay into its current offerings so that “the smallest of merchants” can offer pay later services.
AfterPay was founded by Nick Molnar and Anthony Eisen in 2015 to let customers buy goods, and pay for them later. The firm started its services in Australia and New Zealand, and later expanded to other markets such as the US, the UK, and Canada.
As part of the deal with Square, Molnar and Eisen are joining the company to head AfterPay’s merchant and consumer business.
In 2017, the company merged with its technology provider Touchcorp to form AfterPay Touch Group.
The service got popular in the US for its interest-free offerings after entering the market in 2018. The entry was aided by a $15 million investment from Matrix Ventures.
AfterPay said that as of June 30, it has more than 16 million customers across the globe, through 100,000 merchants. In a 2019 report, the Australian publication Financial Review noted that 75% of the company’s users are millennials.
A report from World Pay noted that in 2020, pay later transactions represented 2.1% of eCommerce transactions. An industry report suggests that the “Buy Now Pay Later” (BNPL) market will reach $33,638 million by 2027.
While the size of the BNPL market is huge, there will be cutthroat competition with Apple rumored to be working on launching a similar service with Goldman Sachs.